Zambia National Building Society v Abraham Miti and Anor (2024/HPC/0411) [2024] ZMHC 228 (28 October 2024)

IN THE HIGH COURT FOR ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (CIVIL JURISDICTION) BETWEEN: 2024/HPC/0411 ZAMBIA NATIONAL BUILDING SOCIETY APPLICANT AND ABRAHAM MITI SEVIM EKICI MI'l'I OFZA'MBIA IAR ERCIAL •stON 1 ST RESPONDENT 2 ND RESPONDENT ? u GCT ~=~➔ Before Hon. Lady Uustice Cjiilopi&o Bridget Maka P. O. BO _t:., 1. L''5A - - - For the Applicant: Ms. N. Nalutongwe of Mesdames Ndemanga Mwalula and Associates For the 1s t Respondent: In Person For the 2 n d Respondent: No appearance JUDGMENT Legislation referred to: 1. The High Court Rules, Chapter 27 of the Laws of Zambia. Cases referred to: 1. Reeves Malambo vs. Patco Agro Industries Limited 2007 ZR 2. Lackson Mwabi Simwanza vs. Sangwa Simpasa and Another 2005/HP/0500 (unreported) Jl 3. National Drug Company Limited and Another vs. Mary Katongo Appeal No. 79 of2001 4. Kanjala Hills Lodge Limited vs. Stanbic2012 ZMSC 33 Other works referred to: 1. Atkins Court Forms, Volume 28 1. Introduction. 1.1. On 5 th July, 2024, the Applicant commenced action against the Respondents, seeking the following reliefs; 1. Payment of the outstanding debt of Kl,253,248.04 as at 3rd June, 2024 due to the Applicant under a Medium-Term Loan Facility availed to the Respondents and secured by a Legal Mortgage on Stand No. 25859 situate in Lusaka; 2. Delivery by the 1st and 2 nd Respondents to the Applicant of vacant possession of the mortgaged property being Stand No. 25859, Lusaka; 3. Foreclosure of Stand No. 25859, Lusaka; 4. Sale of the aforementioned mortgaged property; 5. Any other relief the Court may deem fit; and 6. Costs for the action. 1.2. The originating summons was pursuant to Order 30 rule 14 of the High Court Rules and was accompanied by an affidavit and skeleton arguments. 1.3. The Respondents contested the summons and filed an affidavit in opposition on 10t h September 2024. J2 2. Affidavit in Support. 2.1. The supporting affidavit was sworn by Michael Fumbani Nyirenda, the Manager Collections and Recoveries of the Applicant. 2 .2. The essence of the evidence was that on 24th February 2023, the Respondents were jointly provided with a Medium-Term Loan Facility of Kl,201,500.00 at an interest rate of 16% per annum for a duration of 180 months. 2 .3. As security for the loan facility, a Mortgage Deed was executed on the Respondents' property, stand No. 25859, Lusaka. Copies of the Loan Facility letter and the registered Mortgage Deed were submitted as exhibits "MFN 111 and "MFN 2. " 2.4. It was stated that the Respondents had defaulted on their monthly installments. Consequently, the principal loan amount and interest became due in accordance with the Mortgage Deed. Further that, the Respondents had been inconsistent in making the required monthly payments, leading to the accumulation of arrears on the account. 2 .5. Additionally, it was noted that in a letter dated 13th October 2023 , the Applicant informed the Respondents that their account had accumulated arrears of K58,147.78, which needed to be cleared within 14 days. The letter was submitted as exhibit "MFN 3." J3 2 .6. In an email dated 28 th September 2023, the Respondents requested a two-month moratorium to address their financial difficulties. However, the Applicant did not grant this request. The email was submitted as exhibit "MFN 4." 2.7. The Respondents did not make any payment, and by 17th April 2024, an amount ofKl,215,719.61 was outstanding. A copy of the Respondents' statement of account was presented as exhibit "MFN 5." 3. The Applicant's Legal Arguments. 3.1. The Applicant premised its argument on Order 30 Rule 14 of the High Court Rules. 3.2. It was submitted that the creation of a mortgage is accompanied by the creation of remedies. Further, that the remedies available depend on whether the mortgage created is a legal or equitable mortgage. 3.3. Further that a mortgagee is at liberty to exercise his or her right to foreclose and sell the property 1n the event of default and failure by the mortgagor to redeem the mortgaged property. This was elucidated in the case of Reeves Malambo vs. Patco Agro Industries Limited11l. 3 .4. It was further asserted that it was a well-established principle that once a mortgagor fails to fulfill their obligations by settling the loan in monthly installments, the mortgagee is entitled to pursue any or all available remedies to ensure the liabilities are settled and all losses J4 suffered by the Applicant are compensated. To reinforce this argument, the case of Lackson Mwabi Simwanza vs. Sangwa Simpasa and Another121 was cited. 3.5. Furthermore, it was argued that parties are bound to a contract they had entered freely, as was restated in the case of National Drug Company Limited and Another vs. Mary Katongol31. It was contended that the Respondents entered into the contract voluntarily and as such they must be bound by the terms of the contract. 3.6. In summary, it was submitted that the Applicant should not be prejudiced further and have the liberty to enforce their legal and contractual rights . 4. The Respondents, Affidavit in Opposition. 4 . 1. The affidavit in opposition was sworn by Abraham Miti, the 1st Respondent. 4.2. Mr. Miti acknowledged owing the Applicant the sum of Kl,253,248.00. However, he expressed concern that the application for vacant possession and foreclosure was made hastily, as the Applicant did not explore all other options. Mr. Miti's con cerns were communicated to the Applicant in an email dated 3 rd May 2024, noting that he had made a partial payment of KS0,000.00 towards the outs tan ding loan balance. A copy of the email was submitted as exhibit "AM 1. '' JS 4.3. Additionally, he claimed to have offered the Applicant a reasonable option to settle all outstanding arrears and pay off the loan within six months. He also asserted that he would suffer irreparable harm if the Applicant did not honor his request. 5. The 1st Respondent's Skeleton Arguments 5.1 The record shows that the 1st Respondent's skeleton arguments were not filed together with the affidavit in opposition. This was in contravention of Order 30 rule 3A sub-rule 3 of the High Court(Amendment) Rules. 6. The Applicant's Affidavit in Reply. 6.1. The affidavit in reply reiterated that the Respondents' did not dispute owing the outstanding debt and were in breach of the terms of the loan facility extended to them. 6.2. The assertion that the application for vacant possession was made hastily was disputed stating that the Respondents had been given sufficient time to normalize their account. 6.3. It was further noted that the Applicant had proposed reasonable terms for a consent settlement, which were communicated to the Respondents via an email dated 9 th July 2024. However, the Respondents neglected to respond to the email. A copy of the email was submitted as exhibit "MFN 2". J6 6.4. Furthermore, that the Respondents, in an email dated 20th August 2024, proposed an extension of the loan tenure and a settlement of six months' repayments. However, the Applicant denied the proposal, as the initial terms of the loan had already been breached by the Respondents. A copy of the email correspondence was submitted as exhibit "MFN3." 7. Hearing. 7 . 1. At the hearing of the originating summons, the Applicant was represented by Counsel. The 1st Respondent was in person whilst there was no appearance by the 2 nd Respondent. 7.2. Ms. Nalutongwe, Counsel for the Applicant, informed the Court that she was relying on the affidavit in support, skeleton arguments, and the affidavit in reply. 7.3. In addition, Ms. Nalutongwe submitted that the loan facility agreement had been made voluntarily by both parties and that the Applicant was entitled to the reliefs sought. 7.4. Furthermore, that it was not in dispute that the Respondents had failed to honor and fulfill their obligations under the loan agreement. Counsel argued that the Court should grant the Applicant's application to enable the recovery of all monies due and payable. J7 7.5. The 1st Respondent on his part reiterated that he and the 2 nd Respondent were not disputing their debt to the Applicant. He however expressed concern that the Applicant handled the matter with undue haste, despite the established relationship between the Respondents and the Applicant, as this was their third contract together. 7.6. He further submitted that the Respondents had made a payment of KS0,000.00, demonstrating their commitment to repaying their debt. He expressed their willingness to settle the loan if the Applicant could grant them more time. He mentioned that they had put some properties up for sale, hoping the sales would materialize so they could pay off the outstanding amount. Additionally, he requested 21 days to clear all arrears and a six-month period to settle the loan. 7 .7. In reply, Ms. Nalutongwe stated that the KS0,000.00 paid by the Respondents was due to the arrears that had accrued. She noted that the Respondents had not made any other payments apart from the KS0,000.00 , despite claiming to have sold some of their property. 7.8. She argued that the Respondents had not shown any commitment to fulfilling their obligations under the loan agreement. She reiterated that the reliefs sought by the Applicant would help the Applicant recover from the breach of agreement by the Respondents. J8 8. Consideration and Determination. 8.1. I have considered all the evidence and the submissions by both parties. 8 .2. It is not in dispute that the Applicant offered a Medium Term loan facility dated 24th February, 2023 to the Respondents. The sum amount was Kl ,201,500.00 at an interest rate of 16% per annum. The repayment period was 180 Months. The offer of Medium-Term Mortgage Loan exhibited as "MFN 1" in the affidavit in support shows that both Respondents who are husband and wife accepted the offer on 3 rd March 2023. 8.3. It is further not in dispute that as security for the Loan Facility, a Mortgage Deed exhibited as "MFN2" was executed on the Respondents' property being Stand No. 25859, Woodlands, Lusaka. 8.4. It is further indisputable that the Respondents defaulted in their monthly installment repayments. Consequently and as per the terms of the loan facility, the whole balance of the principal amount and interest became due. The Respondents therefore owe the Applicant the sum of Kl ,253,248.04. 8.5. The Respondents have infact explicitly admitted owing the Applicant the sum of Kl ,253,248.04 and that the debt was secured by a Legal Mortgage on stand no. 25859 situate in Lusaka. J9 8.6. The issue for consideration therefore is whether the Respondents can be granted additional time within which to repay the outstanding loan amount. 8. 7. It is trite that Order 30 Rule 14 High Court Rules upon which this mortgage action is premised outlines the remedies available to a mortgagee in the enforcement of a legal or equitable mortgage. These remedies include payment of moneys secured by the mortgage or charge; sale; foreclosure; redemption; reconveyance and delivery of possession by the mortgagee. 8.8. It is trite law that a mortgagee is entitled to cumulative remedies. This view is buttressed in Atkins Court Forms Vol.28 at page 8 where the learned authors stated that; "when the mortgagor defaults, the mortgagee is entitled to pursue all his remedies concurrently" 8. 9. In the Supreme Court case of Kanjala Hills Lodge Limited vs. Stanbicl4 1 it was held that once there is a default on a condition, such as default of a repayment installment, the mortgagee becomes entitled to pursue all the remedies available to it. In those circumstances, the Court in exercise of its power to afford the mortgagor the equity of redemption is duty bound to prescribe a reasonable period within which the mortgagee may wait before enjoying the fruits of its relief. JlO 8.10. The documents exhibited in the affidavit in support reveals that the Respondents' request for a two-month moratorium was declined by the Applicant in the email dated 13th October 2023. The Respondents were on the same date informed of the arrears that had accrued on the Medium-Term Loan. The Respondents have therefore been in default since October 2023. 8.11. Further, a demand for the Respondents to pay the outstanding balance was made on 22nd April, 2024 in a letter authored by the Applicants advocates. I further note that by email dated the 9 th July, 2024, the Applicant's attempt at a consent settlement proved futile. 8.12. The foregoing in my view negates the Respondents assertion that the Applicant acted hastily without considering available options in taking out this action. The Respondents' concern for additional time within which to settle the debt cannot be basis for the Applicant not to seek legal redress in its quest to enforce the Mortgage Deed. In any case, the Court always prescribes a reasonable period within which the mortgagee may wait before enjoying the fruits of its reliefs. 8.13. The Applicant has clearly demonstrated that it provided a loan facility to the Respondents, secured by a legal mortgage. The Applicant rightfully qualifies for the remedies available to mortgagee in a legal mortgage agreement. Jll 9. Conclusion and Orders. 9. 1. I am satisfied that the Applicant has proved its case on the balance of probabilities. 9 .2. I therefore enter Judgment in favour of the Applicant in the sum of Kl ,253,248.04, being the outstanding debt on the Medium-Term Loan Facility. 9.3. The Respondents shall pay the Judgment sum of Kl ,253,248.04, inclusive of contractual interest from date of originating summons to date of Judgment and thereafter at commercial bank lending rate as determined by Bank of Zambia within 60 days from the date of Judgment, failing which the Applicant shall be at liberty to foreclose and sale the mortgaged property being Stand No. 25859, Lusaka. 9.4. The Respondents shall deliver vacant possession of the mortgaged property to the Applicant. 9 .5. I award costs to the Applicant to be taxed in default of Agreement. Delivered at Lusaka this 28th day of October, 2024 ................. ~ ......... . Chilombo Bridget Maka HIGH COURT JUDGE J12