Pulse Financial Services Limited T/A Entrepreneurs Financial Centre v Sepiso Lungwangwa (2024/HPC/0214) [2024] ZMHC 237 (9 May 2024)

IN THE HIGH COURT FOR ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: PULSE FINANCIAL SERVICES LI Entrepreneurs Financial Centre AND 2024/HPC/0214 APPLICANT SEPISO LUNGWANGWA RESPONDENT Before the Honourable Lady Justice Chilombo Bridget Maka. For the Plaintiff: Mr. J. Shawa - In House Counsel. For the Respondent: In Person. JUDGMENT Legislation Referred to: 1. The Banking and Financial Services Act No. 7 of 2017. 2. The High Court Rules, Chapter 27 of the Laws of Zambia. 3. The Rules of the Supreme Court of England, 1999 Edition (White Book). Cases Referred to: 1. Santley vs. Wilde ( 1899) 2 CH, 474. 2. Kanjala Hills Lodge Limited & Veronica Namakau Jayetileke vs. Stanbic Bank Zambia Limited (2012) Vol. 2, 285. 3. Brian Musonda (Receiver of First Merchant Bank Zambia Limited (In Receivership) vs. Hyper Food Product and Others (1999) Z. R, 124 (SC). Other Works Referred to: 1. Nigel P. Gravell's Land Law Text and Materials, 3 rd Edition. 2. Megarry's Manual of the Law of Real Property 6 th Edition. 3. Halsbury's Laws of England 5th Edition Vol. 77 (2010). 1. Introduction. 1.1. The Applicant operates as a financial service provider under the regulations stipulated by the Banking and Financial Services Act. The Respondent, a Zambian national, is the registered owner of a property known as Farm 378A/ A/ 121, Lusaka. 1.2. The Applicant initiated this action against the Respondent on 21 st March, 2024 by way of Originating Summons, claiming the following reliefs:- i. Payment of all monies owed by the Respondent to the Applicant which as at 25th March, 2024 stood at ZMW634,164.50 plus contractual interest thereon and other charges due to the Applicant by virtue of a loan agreement executed on 30th May, 2023 and secured by a Further Charge relating to Subdivision No. 1214 of Subdivision A of Farm No. 378a situate in the Lusaka Province of Zambia having certificate of Title No. 26171, and further secured by movable collateral assets. ii. An Order for foreclosure, delivery and possession of the Subdivision No. 1214 of Subdivision A of Farm No. 378a situate in the Lusaka Province of Zambia having certificate of Title No. 26171 being the mortgaged property, and that thereafter, the Applicant exercises its power of sale. iii. An Order for sale of the pledged movable collateral assets namely; Black 42 inches Samsung Television Set, Black 42 J2 ,~ - - - inches Hisense Television set, Grey Hisense upright Fridge, White Defy 4 Plate cooker, White kitchen unit, 6 chair Black Dining Table, 4 pieces Brown Sofas, 2 pieces Grey Sofas. iv. Contractual interest on the loan amount v. vi. Costs Further or any other reliefs the Court may deem fit. 1.3. The Originating Summons was filed along with an affidavit in support and skeleton arguments. 2. The Applicant's Case. 2.1. The basis for this action rests on the fact that the Respondent initially obtained a loan facility from the Applicant amounting to ZMW380,000.00, secured by a legal mortgage over Farm No. 378a/A/1214, Lusaka (hereinafter referred to as the mortgaged property). Subsequently, on May 30 th , 2023, at the Respondent's request, an additional sum of ZMW600,000.00 was provided by the Applicant, and same was secured by an extension of the mortgage on the aforementioned property through a Further Charge. The Loan Agreement and the Further Charge were submitted as exhibits "KM2a" and "KM2b" respectively. Furthermore, the loaned amount was partially secured by movable collateral assets. 2.2. Per the terms outlined in the loan agreement, the loan had a duration of 24 months and bore interest at a rate of 4.58% per month. Additionally, it was stipulated within the J3 agreement that the Respondent was obligated to make monthly installments totaling ZMW40,127.67. 2.3. The Applicant presented additional evidence indicating that the Respondent consistently defaulted on the installment payments, as illustrated by copies of the statement of account and the amortization schedule, marked 'KM4a' and 'KM4b' respectively. Despite numerous reminders to settle the arrears, the Respondent failed and/ or refused to pay the outstanding amount, which, as of March 25 th , 2024, amounted to a total of ZMW634, 164.50. 2.4. In presenting legal arguments to support the action, reference was made to the case of Santley vs. Wilde(ll to elucidate the nature of mortgages, instead of the incorrectly cited 'Stanley' vs. Wilde. The Applicant contended that upon the creation of a mortgage, remedies are inherently established. To bolster this argument, the Court was directed to the observations of esteemed authors in the Land Law Text and Materials 3 rd Edition, at page 891, where these remedies were delineated. 2.5. The Applicant further cited the case of Kanjala Hills Lodge Limited & Veronica Namakau Jayetileke vs. Stanbic Bank Zambia Limited(2 1, in which the Supreme Court referenced Megarry's Manual of the Law of Real Property, 6 th Edition. This case affirmed that the legal right of redemption is forfeited upon a breach of condition, thereby authorizing the mortgagee to commence foreclosure proceedings.". J4 e 2.6. The Applicant cited Order 30 Rule 14 of the High Court Rules and Order 88 of the White Book as legal bases for initiating this action. Furthermore, reliance was placed on the case of Brian Musonda {Receiver of First Merchant Bank Zambia Limited {In Receivership) vs. Hyper Food Product and Othersl 3l to assert the mortgagee's prerogative to pursue all available remedies simultaneously. 2.7. The Applicant contended that a legal mortgage was established between the parties, subsequently followed by the registration of a Further Charge on the mortgaged property. This was accompanied by the deposition of the title with the Applicant, serving as security for a loan extended to the Respondent. 2.8. It was additionally asserted that the Respondent defaulted on his payment obligations, necessitating the initiation of this action. The Applicant requests that this Court grant the remedies outlined in the Originating Summons, with costs. 3. The Respondent's Case. 3.1. The Respondent did not submit any documents contesting the Applicant's action. 4. Hearing. 4.1. At the hearing of this matter, Counsel representing the Applicant was present, while the Respondent appeared in person. JS 4.2. On behalf of the Applicant, Mr. Shawa informed the Court that he was solely relying on the affidavit and skeleton arguments submitted 1n support of the Originating Summons. 4.3. Mr. Sepiso Lungwangwa acknowledged owing the sums claimed by the Applicant and expressed non-opposition to the matter. However, he requested time to locate a buyer for the mortgaged property to facilitate the full settlement of the debt. 5. Consideration and Determination. 5.1. I have reviewed the originating process and its accompanying documents. Additionally, I have duly noted the Respondent's lack of opposition to the Applicant's claim. The Respondent explicitly admitted to owing the claimed sum . 5.2. The Applicant's action , as submitted, is anchored on Order 30 Rule 14 of the High Court Rules. it enacts as follows: - "Any mortgagee or mortgagor, whether legal or equitable or any person entitled to or having property subject to a legal or equitable charge, or any person having the right to foreclosure or redeem any mortgage, whether legal or equitable, may take out as of course an originating summons, returnable in the chambers of a Judge for such relief of the nature or kind following as may by the summons be specified, and as the circumstances of the case may require; that is to say- Payment of moneys secured by the mortgage or charge, Sale; J6 Foreclosure: Delivery of possession (whether before or after foreclosure) to the mortgagee or person entitled to the charge by the mortgagor or person having the property subject to the charge or by any other person in, or alleged to be in possession of the property; Redemption; Reconveyance; Delivery of possession by the mortgagee" 5.3. The facts herein are undisputed. The Respondent initially received a loan facility from the Applicant totaling ZMW380,000.00, secured by a legal mortgage over the mortgaged property. This IS evidenced by the exhibited Mortgage Deed registered on December 19th , 2022, and the endorsement on the certificate of title, displayed as "KMlc". Subsequently, as per a loan agreement dated May 30th, 2023, marked as exhibit "KM2a", the Respondent obtained an additional loan of ZMW600,000.00, secured by a registered Further Charge on the mortgaged property. Exhibit "KM2b" presents a copy of this Further Charge, registered at the Ministry of Lands on June 20 th , 2023. Furthermore, the Respondent provided household assets as collateral. 5.4. From the foregoing, it is evident that a mortgage relationship was established between the parties. The registration of both the initial mortgage and the subsequent Further Charge validates the legality of the mortgage. I am fortified in this finding by the definition of a mortgage propounded by the J7 learned authors of Halsbury's Laws of England, 5 th Edition who wrote that:- "A mortgage is a disposition of property as security for a debt. It may be effected by a demise or sub-demise of land, by a transfer of a chattel, by an assignment of a chose or thing in action, by a charge on any interest in real or personal property or by an agreement to create a charge, for securing money or money's worth, the security being redeemable on repayment or discharge of the debt or other obligation. Generally, whenever a disposition of an estate or interest is originally intended as a security for money, whether this intention appears from the deed itself or from any other instrument or from oral evidence, it is considered as a mortgage and redeemable." 5.5. The above authors further explained the nature of mortgages as follows:- "A mortgage consists of two things, namely a personal contract for payment of a debt and a disposition or charge of the mortgagor's estate or interest as security for the repayment of the debt; in equity the estate or interest so transferred is no more than a pledge or security. Every mortgage implies a debt and a personal obligation by the mortgagor to pay it." 5.6. The undisputed fact remains that the Respondent defaulted on his repayment obligations, as acknowledged by Mr. Lungwangwa himself. This assertion is further supported by the exhibited account statement and amortization schedule J8 presented in the affidavit in support of this action. Consequently, the Applicant's action is therefore properly before this Court. The Applicant is well within its rights to pursue the remedies available to a mortgagee. This position is reinforced in the precedent set forth in the cited Kanjala Hills Case, wherein it was held that:- "The Appellants having defaulted in their repayment obligation cannot hide behind the right of redemption. This view is buttressed in Atkins Court Forms Vol. 28 where the learned authors have stated at page 8 that: 'When the mortgagor defaults the mortgagee is entitled to pursue all his remedies concurrently'." 5. 7. On a balance of probabilities, the Applicant has demonstrated that it provided a loan facility to the Respondent, secured by a legal mortgage over the mortgaged property and household assets as collateral. As such, the Applicant rightfully qualifies for the remedies typically available to a mortgagee in a legal mortgage agreement. 6. Conclusion and Orders. 6.1. On account of the legal mortgage that was created between the parties, the Applicant is entitled to payment of the money that was obtained by the Respondent through the loan facility together with the contractual interest thereon. In default of payment, the foreclosure of the property that was pledged as security and the sale of the pledged household assets. J9 6.2. I therefore enter Judgment in favour of the Applicant for the payment of the sum of ZMW634, 164.50 inclusive of contractual interest. 6.3. The Respondent is hereby Ordered to liquidated the Judgment sum within 120 days of this Judgment, failure to which the Applicant shall be at liberty to foreclose on and sale the mortgaged property known as Farm No. 378a/A/1214, Lusaka. 6.4 . The Respondent shall deliver vacant possession of the mortgaged property to the Applicant. 6. 5. I also Order the sale of the pledged movable collateral assets. 6.6. Costs are for the Applicant to taxed in default of agreement. Delivered at Lusaka this 9 th day of May, 2024 . ............... ~ ............ . Chilombo Bridget Maka HIGH COURT JUDGE JlO