VG Limited T/A Michelange Executive Lodge And Restaurant v Development Bank of Zambia (APPEAL No. 72 / 2024) [2025] ZMCA 33 (25 February 2025)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) APPEAL No. 72 / 2024 .. - - - -: - > I" ~ - " .,. '- ' ,-..,~l .. Jl!t ~ ' B ETWEEN • • VG LIMITED T/A MICHELANGEuf'~CUTIVE . ·, 'APPELLANT • ·-, / \ J:, , LODGE AND RESTAURANT ! , '._,r / 2 5 ~GI ... ·t AND -FEB - . ;- - ·~ ~-~ .... ~ . , ._. · . . , , / A '.,Clo!- DEVELOPMENT BANK OF ZAMBIA " '~~ ..;.·- ' RESPONDENT CORAM: Siavwapa JP, Chishimba and Patel, JJA On 18th and 25 th February, 2 025 FOR THE APPELLANT: MR. A. KASOLO OF MULILANSOLO FOR THE RESPONDENT:MR. M. MUKONDE IN-HOUSE CHAMBERS COUNSEL JUDGMENT SIAVWAPA, JP delivered the J u dgm ent of th e Court Cases Referred to: 1. B. P. Zambia Plc v Expedito Chipasha & 235 others) SCZ Judgment No 57 of 2018 2. Kasote Singogo v Lafarge Zambia Plc) SCZ Appeal No 20 of 3. First Alliance bank v Credit Finance Ltd & two others, CAZ Appeal No 96 of 2023 Legislation Referred to: 1. 2 . Judgments Act Chapter 81 of the Laws of Zambia Law Reform (Miscellaneous Provisions) Act Chapter 74 of the Laws of Zambia 3. High Court Rules pursuant 'to the High Court Act Chapter 27 of the laws of Zambia Other Works 1. Halsbury 's Laws of England Vol 27 third edition 1.0 INTRODUCTION 1.1 This is an appeal against the Judgment of the High Court dated 29 th December 2023. 1.2 The said Judgment handed down by the Honourable Mrs. Justice Ireen Zeko Mbewe decided that the Appellant had an outstanding sum owing to the Respondent by way of interest. 2 .0 BACKGROUND 2 .1 By Agreement consummated by a facility letter dated 6 th January 2015, the Respondent herein agreed to extend a Medium-Term Loan in the sum of K7, 958, 000.00 and a Short-Term Loan in the sum of K 292, 000. 00 to the Appellant. 2 .2 The Loan facilities were secured by several legal mortgages over various subdivisions of Farm No. 748 Ndola; fixed and floating debentures over all fixed and floating assets of the company, unlimited joint and several Guarantees of J2 shareholders and subordination of Shareholders/Directors Loans. 2 . 3 The parties varied and restructured the facilities later on in 2015 and 2016. Within 2016, the Appellant fell into default on the facilities. 2 .4 The Respondent followed the default with a letter of demand which the Appellant did not honour. 2 .5 On 22 nd January 2018, the Respondent filed Originating Summons pursuant to Order XXX rule 14 of the High Court Rules. 2 .6 Both the Originating Summons and the Affidavit in Support contained claims in the sum of K13 , 613, 474.91 as the outstanding amount on the loans. 2 .7 In the Judgment of the Court delivered by the Honourable Mr. Justice William Mweemba on 26 th February, 2020, the Court below granted the remedies as set out in the Originating Summons. These were; the outstanding sum of K13, 612, 474.91 payable within 21 days and, in default, an order of fore closure on the mortgaged properties and the sale thereof. 3.0 THE ACTION BY THE APPELLANT 3.1 Following the Judgment of Mr. Justice William Mweemba, the Appellants engaged the Respondent in writing, with a view to negotiating a settlement plan for the Judgment debt. J3 3.2 At page 107 of the Record of Appeal is a letter dated 6 th October 2020, addressed to the Respondent under the hand of the Appellant's Managing Director. 3.3 The letter states that it was in response to a letter under the hand of the Respondent dated 21st September 2020. In that letter the Appellant proposes a payment plan beginning with an offer to pay KS, 000, 000.00 immediately and the balance in the course of the fallowing year. 3.4 By the letter dated 9 th October 2020, the Respondent responded to the proposed payment plan, accepting the plan with emphasis that the KS, 000, 000.00 be paid immediately. The letter is at page 109 of the Record of Appeal. 3.5 On 12th September 2021, the Appellant wrote a letter that tabulates the schedule of payments made and the outstanding balance on the debt. The Appellant requested an extension of the period by six months within which to pay the balance of K2 , 391 , 374.00. The letter is at pages 110 and 111 of the Record of Appeal. 3.6 However, in reply to the letter referred to in paragraph 3.5 above, the Respondent stated the outstanding balance as Kl2, 499, 356.82. The Respondent further urged the Appellant to settle the balance plus interest on or before 31 st January 2022. The letter, as appears at page 112 of the Record of Appeal, is dated 14th December 2021. J4 3 . 7 In February 2023, the Appellant herein and two others commenced an action in the Commercial Division of the High Court under Cause No. 2023/HPC 0077. 3 .8 By the said action commenced by a Writ of Summons and Statement of Claim, the Appellant and two others claimed for an order of specific performance that the Respondent herein discharges the third-party mortgages on the security properties. In the alternative, an order for damages for breach of contract. 3 . 9 The facts giving rise to the action as set out in the Statement of Claim are that following the Judgment of the Court that the Appellant pays Kl3, 613, 474 to the Respondent. The Respondent accepted its proposed payment plan stating the Judgment sum as full and final payment. 3 .10 Further that the Appellant, having fully discharged the debt in accordance with the proposed and agreed upon payment plan, the Respondent breached the agreement. 4 .0 DECISION OF THE HIGH COURT 4.1 The learned Judge delivered the Judgment that has given rise to this appeal on 29 th December 2023. 4.2 In that Judgment, the learned Judge dismissed the claim for specific performance and damages for breach of contract. JS 4.3 In dismissing the claims, the learned Judge held that the Appellant had not agreed to forebear interest on the Judgment sum. That the Respondent was therefore, not in breach of any agreement. 5. 0 THE APPEAL 5 .1 The Appellant filed its Notice and Memorandum of Appeal in January 2024 with two grounds of appeal set out as follow; 1. The learned puisne Judge erred in law and fact in finding that there is interest outstanding from the judgment of the court dated 26th February, 2020 yet the Defendant admitted in cross-examination that the principal and contractual interest had been paid. 2. The learned puisne Judge in the Court below made an unbalanced evaluation of the evidence thereby falling into grave error. 6 .0 ARGUMENTS IN SUPPORT 6 .1 The thrust of the Appellant's argument in ground one is that interest stopped to run from the date it paid the sum of K 13, 613, 474.9 1. The Appellant based its position on the case of BP Zambia PLC v. Expedito Chipasha and 235 Others 1 and the learned authors of Halsbury's Laws of England Vol 27 3 rd Edition page 12. Both authorities are to the effect that once the Judgment debt is paid, interest ceases to run. J6 6 .2 In ground two, the Appellant faults the learned Judge for holding that it proposed a payment plan and not forbearance of interest to the Respondent. 6 .3 The Appellant also disputes the assertion that the Respondent never received the letter in which the Appellant asked for forbearance of interest. 6 .4 On the basis of the above, the Appellant alleges that the learned Judge is guilty of an unbalanced evaluation of the evidence before her. 7 .0 ARGUMENTS IN OPPOSITION 7 .1 In arguing ground one, the Respondent asserts that the sum of Kl3, 613, 474.91 the Appellant paid included contractual interest from the date of the loan until Judgment. 7 .2 The Respondent further argues that the cited case of BP (Z) Plc v Expedito Chipasha & 235 Others (supra), which the Appellant relied upon, speaks to the freezing of interest once the Judgment debt has been paid into Court. 7 .3 In ground two , the Respondent finds no fault in the holding by the learned Judge that the Appellant, in its letter of 6 th October 2020, proposed a payment p lan and not the forbearance of interest. 7 .4 In support of the argument, the Respondent points to the letter occurring at page 107 and not the one at page 67 of J7 the Record of Appeal as the one the Respondent responded to. 7 .5 The argument on the two letters is that although they are generally similar, the one at page 107 does not have a request to forego interest. 8 .0 THE HEARING 8.1 At the hearing of the appeal, both counsel informed us that they would rely on their filed heads of argument and documents. 9 .0 OUR ANALYSIS AND DECISION 9.1 In this appeal, the issue in dispute js that of interest on the Judgment debt. The lingering question therefore, is; did the learned Judge in the Court below, properly evaluate the evidence in arriving at the decision that the Appellant owed the Respondent interest on the Judgment debt? 9.2 It is not in dispute that the Judgment of the Court below dated 26th February 2020, awarded the Respondent the sum of K13, 613, 4 74.91 with interest. 9.3 According to the said Judgment, which runs from page 93 to 106 of the Record of Appeal, in particular, at page 98 (J6) paragraph 5, the Appellant pleaded that the K 13, 613, 474.91 claimed included interest and the cancellation fee. 9. 4 That means that the sum claimed and awarded comprised the principle loan and the contractual interest as set out in the facility letters. J8 9 .5 Further, the amount due was as of 9 th June , 2017 when the default occurred. 9 .6 In the same Judgment, at page 96, paragraph one of the Record of Appeal, the learned Judge states that clause 6 of the facility letter pegged interest on both the medium-term and short-term loans at the Bank of Zambia policy rate with a 9% margin per annum compounded monthly. 9 . 7 It follows that at the time of Judgment, the principal amount of the outstanding loan and the interest contractually agreed, are combined to form the Judgment sum. 9 .8 This is the position taken by the Suprem e Court of Zambia in the case of Kasote Singogo v Lafarge (Z) Plc2 which we cited in the case of First Alliance Bank v. Credit Finance Ltd and Two Others3 . 9 .9 Having established that the Judgment deb t comprises the principal debt and the contractual interest, the Court h as a statutory mandate to award interest post-judgment. To that effect, Section 2 of the Judgments Act provides a s follows; "Every judgment, order or decree of the High Court or of a Subordinate Court whereby any sum of money or any costs, charges or expenses, is or are to be payable to any person shall carry interest at the rate of six percent per annum from the time of entering up such judgment, order or decree until the same shall be satisfied and such interest may be levied under a writ of execution on su ch judgment, order or decree." J9 9 . 10 So, in so far as the above provision is concerned, statutory interest is mandatory whether or not the successful party has asked for it. Further it is payable on any monetary judgment debt regardless of whether the parties included in their contract a rate of interest or not. 9 .11 On the other hand, Section 4 of the Law Reform (Miscellaneous Provisions) Act provides as follows; "In any proceedings tried in any court of record for the recovery of any debt or damages, the court may, if it thinks fit, order that there shall be included in the sums for which judgment is given interest at such rate as it things fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment." 9 . 12 The above provision vests discretion in a Court of record to order pre-judgment interest at the rate it deems fit. 9 . 13 In this appeal, there is no dispute over the mandatory nature of post-judgment statutory interest. However, based on the manner the first ground of appeal is couched, it appears that the Appellant is not aware of the distinction between contractual and post-judgment statutory interest. 9 . 14 The Appellant claims, in the first ground, that the Court below misdirected itself when it held that there was outstanding interest contrary to the admission in cross examination by the Respondent's witness that the K13, 613, 474.91 included interest. JlO 9.15 The Appellant relied on the following exchange between counsel for the Appellant and DWl as recorded at page 224 lines 5 to 10 of the Record of Appeal Question: When you took an action to court you claimed for K13, 613, 474.91 not so? Answer: That is correct Question: That amount constituted the principal amount and the interest that took it to 13? Answer: Yes, that is correct. Question: That is the contractual interest the court ref erred to in the judgment? Answer: Yes 9 .16 To further its argument, the Appellant quoted a passage from the case of BP Zambia Plc v. Expedito Chipasha and 235 Others (supra). 9 .17 The passage relied upon speaks to the intent of interest as a reward for keeping a judgment creditor out of the money and that once the amount is paid in full no interest is payable going forward. 9 .18 The Appellant therefore, argues that interest stopped accruing on the date it paid the Judgment sum of Kl 3 , 613, 474.91. 9 .19 According to the statement of account occurring at page 77 of the Record of Appeal, the Appellant completed paying the Jll Judgment debt on 25th January 2022 and in that regard , no interest accrued from that date. 9 .20 Putting the matter into context, the Judgment granting the claimed amount was delivered on 26th February 2020, while the final settlement of the debt was made on 25 th January 2022. 9 .21 It means that post-judgment interest began to run with effect from 27th February 2020, until 25th January 2022 , when full payment was made. 9 .22 It follows therefore , that the Respondent is entitled to post judgment statutory interest that accrued between the date of Judgment on 26th February 2020, and final payment on 25th January 2022. 9. 23 In the second ground, the issue is whether the Respondent accepted the request to forebear interest so that the payment of the Judgment sum is considered to be full and final payment. 9 .24 This argument hinges on the two letters earlier referred to; one at page 6 7 and another at page 107 of the Record of Appeal. Whereas the one at page 67 includes a request to pay the Judgment sum interest free , the one at page 107 does not. 9.25 Both letters bear the same date, the 6th October 2020, but with remarkable differences. Among the differences are the following features ; J12 1. The font sizes are different. 2. The one at page 107 has a received stamp of the Respondent's Managing Director dated 8th October 2020, a feature missing from the one at page 67. 3. The one at page 107 has action folios in handwriting made on 9th October 2020, whereas the one at page 67 is not actioned by the Respondent. 9 .26 At page 109 of the Record of Appeal is a letter dated 9 th October 2020, addressed to the Appellant under the hand of the Respondent's Managing Director. 9 .27 In the said letter, which is a reply to the Appellant's letter of 6 th October 2020, the Respondent accepts the proposal to liquidate the Kl 3, 613, 4 74.00 as requested. The letter does not say anything about the interest. 9 .28 The question then is which of the two letters from the Appellant occurring at page 67 and 107 of the Record of Appeal did the Respondent reply to in its letter of 9 th October 2020, occurring at page 109 of the Record of Appeal. 9 .29 The Appellant argued that it was erroneous for the learned Judge to hold that the letter dated 6 th October 2020 , was a proposal for a payment plan and not for forbearance of interest. 9.30 In our view, both letters of 6 th October 2020, propose a payment plan to the extent that they request for instalment J13 payment as proposed. So regardless of which of the two letters the Respondent responded to, the fact still remains that they propose a payment plan. The leaned Judge cannot therefore, be faulted for holding as she did. 9. 31 It is however clear, in our view that the letter that landed on the desk of the Respondent's Managing Director is the one occurring at page 107 of the Record of Appeal for two reasons , first because it is part of the Respondent's bundle of documents occurring at page 91 of the Record of Appeal. Secondly, because it was endorsed for action through hand written folios. 9 .32 On the other hand, the letter occurnng at page 67 is contained in the Appellant's bundle of documents. This means that it was in the Appellant's possession. 9.33 Clearly, the letter at page 109 of the Record of Appeal is in response to the letter at page 107 of the Record of Appeal which does not speak to a forbearance of interest. 9.34 There is therefore, no basis upon which we can find that the learned Judge below made an unbalanced evaluation of the evidence. She was on firm ground, to hold as she did in the face of the evidence before her. 10.0 CONCLUSION 10 . l It is our considered view that the Respondent did not forego the post-judgment statutory interest as provided for under Section 2 of the Judgments Act. J14 10.2 Further, the Respondent is entitled to the said interest on the Judgment debt from 26 th February 2020, the date of the Judgment to the 25th January 2022 , the date final payment was made. 10 .3 Ultimately, the appeal is devoid of merit and we dismiss it with costs. I M. J. SIAVWAPA JUDGE PRESIDENT ' F. M. CHISHIMBA COURT OF APPEAL JUDGE A. N. PATEL SC =--=- COURT OF APPEAL JUDGE JlS