Bwalya Mumba v Indo Zambia Bank Limited (Appeal No. 09/2022) [2023] ZMCA 416 (10 February 2023)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT NDOLA ( Criminal Jurisdiction) -<l'lJBLIC Ull f 0 / ' Appeal No. 09/2022 BETWEEN: BWALYA MUMBA . AND 1 9 FEB 2~] ~o REG1sr~y 1 . Bo X 50067 . L\JS ~~~- PPELLANT INDO ZAMBIA BANK LIMITED RESPONDENT Coram: Kondolo, Makungu and Sharpe-Phiri J. J. On the 21 st day of September, 2022 and the 10th day of February, 2023 For the Appellant: In person For the Respondent: M r. C. M Sianondo with Mr. G. Milenji both of Malambo and Company. JUDGMENT MAKUNGU JA, delive red the Judgment of the Court. Cases referred t o: 1. Mususu Kalen go Bu i lding Limited and Another v. Richman 's Money Lenders Enterprises (1999) Z. R 2 7 2. N. B Mbazimo and Others Joint Liquidators of ZIMCO Limited (In Liquidation) v. Reuben Vera (2001 ) ZR 23 3. GDC logis tics Zambia Limited v. Kanyanta and Others SCZ Appeal No. 144 of2014 4. Ganick Refrigeration and Air Condition v. Forest Direct Zambia Limited SCZ Selected Judgrnent No. 3 4 of 2016 5. Kalunga Chansa v. E velyn Hone College Caz Appeal No. 134/ 2 0 19 6. Nevers Sekiuila f\lumba v Muhabi Lungu ( suing in his capacity as National Secretary of MMD (2014) Vol.2 ZR 35 7. Barclays Bank v. Weston Lungu Luwi 2012/HPC/0107 8. NewPlast Indus/ 11es v. Commissioner of Lands and Attorney General (2001) ZRSl l. O IN'TRODUCTION 1. l This appeal is against the judgment of Mwenda J of the High Court dated 1st March, 202 l in which the appellant was ordered to pay the judgment sums that were due under the loan facilities he obtained from the respondent within 90 days, failure to which the respondent would be at liberty to foreclose on the appellants properties which were pledged as security for the credit facilities. l. 2 The respondent herein as applicant then, had issued out originating s lunmons against the appellant herein cited as the respondent: seeking the following reliefs: 1. An order that the respondent does forthwith pay to the applicant the sum of ZMW 371,969.00 due and owing to the applicant as at 31 st July, 2019 plus interest thereon at facility rates by reason of the respondent's default in meeting hts obligations under the facility availed to him by the applicant pursuant to the facility letters dated 9 th February 2012 and 27 th June, 2014 (the Facility Agreement); -J2- 2. An order of possession, sale and or foreclosure over the property against the respondent as registered owner of the property; 3. An order that interest be calculated on the amount owing before judgment at the facility rate and that the rate of interest after judgment be calculated at the rates determined by the Bank of Zambia. 4. An order that the respondent does forthwith pay to the applicant the sum ofZMW91,622.77 due and owing to the applicant as at 31 st January, 2019 plus interest thereon at facility rates by reason of the respondent's default in meeting his obligations under the special personal loan availed to him by the applicant pursuant to the approved letter dated 3 rd September, 2015 (the Special Personal Loan Agreement); 5. An order directing the respondent to convey plot CHlNS/2902/7 (the second property) given under an equitable mortgage. 6. An order that the respondent does forthwith pay to the applicant the sum of ZMW 43,045.33 due and owing to the applicant as at 17 th September, 2019 plus interest -J3- thereon at facility rates by reason of the respondent's default in meeting his obligations under the staff personal loan availed to him pursuant to the approved letter dated 19th July, 2018 (the personal loan agreement); 7. An order that costs of and incidental to the action be borne by the respondent in any event. 2.0 EVIDENCE ON RECORD 2.1 The brief facts of the matter are that: the appellant was the respondent's employee who had maintained a bank account with his en1ployer. In 2012, the appellant obtained a staff housing loan facility 1n the sum of K260,000,000.00 (unrebased ) pursuant to a letter of approval containing standard terms dated 9 th February, 2012 which was duly accepted b y the appellant on the same date. The said approval letter comprised an agreement hereafter referred to as the "Facility Agreement." 2.2 Pursuant to the requirements for security outlined in the Facility Agreement, the appellant provided the following security to the r espondent: (a) A n1ortgage over the appellant's property known as plot no. ML/ 8025 Masala, Ndola (property) dated 2 nd -J4- .. J May, 2012. The mortgage was duly registered to cover the s um of K 260,000,000.00. 2.3 In 2014, the appellant obtained an additional house loan pursuant to an approval letter containing standard terms dated 27th June , 20 14 (Additional Facility Agreement). The security provided to the respondent by the appellant was a further charge over the property, dated 3 rd May, 2014 registered to cover the su1n of ZMW 150,000.00. The appellant defaulted in his obligations to the respondent under the Facility Agreement and the Additional Facility Agreement and as at 31 st July, 2019 the outstanding balance was ZMW 371,969.00. 2.4 In 2015, the a ppellant applied for a special personal loan in the sum of ZM'N 120,000.00 which was granted to him pursuant to an approva l letter dated 3 rd September, 2015 (the Special Personal Loan Agreement). The Special Personal Loan contained standard tern1s as well as conditions that an equitable mortgage with a caveat over the respondent's property known as plot CHINS/2902/7 (the Second Property) be registered. 2.5 The appellant was indebted to the applicant in the sum of ZMW91 ,622. 77 as at 31 st January, 2019 plus interest thereon -JS- at facility rates by reason of the appellant's default in meeting his obligations under the Special Personal Loan Agreement. 2 .. 6 The appellant obtained another personal loan in the sum of ZMW50,000. 0 0 which was availed to him pursuant to a letter dated 19 th July, 2018 (The Personal loan Agreement). As at 17th September, 20 19 the Appellant owed the respondent the sum of ZMW43,04 5 .:13 plus interest at the rates agreed in the facility. 2.7 The appella nt failed to settle the debt despite formal demands made by the respondent. Hence the respondent commenced the foredosure proceedings. 2.8 In his defence, the appellant stated that he worked for the respondent for 16 years from 18th December, 2002 to 31 st January, 2019 when he went on early retirement. That he planned to clear the outstanding loans upon receiving his terminal benefits, but unfortunately, his retirement benefits have not been paid apart from his leave days. 2.9 That the re s pondent removed him from the payroll contrary to the provisions of the Zambian Constitution which require that a person be retained on the payroll until his benefits are fully •-J6- paid. He also clairned that the amounts claimed were compound ed a nd exaggerated. 2.10 As a result of this, he counter-claimed the following: (a) Payn1ent of terminal /retirement benefits for the period worked for up to the date of retirement. (b) Pay1nent of repatriation. (c) Payment of salaries from date of retirement to the date of full paym ent of his retirem ent benefits . (d) Interest on (a) to ( c ) above at commercial bank lending rate. (e) Any other relief and {f) Costs. 3.0 DECISION OF THE COURT BELOW 3. 1 Upon considering the affidavit evidence , the learned trial Judge entered judgment in favour of the applicant for the r ecovery of the s u m of K37 1,969 .00 being the outstanding balance as a t 3 1st July, 20 19 p lus interes t under the House Loa n Facility Agr eement of 9 th February, 2012 and Additional Facility Agreement dated 27th June, 2014. -J7- 3.2 Further judgment was for the recovery of the sum. of K9 l,622.77 due and O'Wing to the applicant as at 3 1st January,2019 plus interest under the Special Personal Loan Agreement dated 3rd September, 20 15. 3.3 The Judge also ordered the respondent (now appeUant) to pay the sum of K43,045.33 due and owing to the applicant as at 17th Septen1ber, 2019 under the Personal loan Agreement dated 19th July, 20 18. 3.4 It was further adjudged that the judgment sums shall attract interest at facility rates from the date of originating summons to the date of judgment and thereafter, at bank lending rate as determined by the Bank of Zambia. 3.5 The respondent was given a grace period of 90 days from the date of judgment within which to pay the judgment debt, failure to which the applicant would be at liberty with respect to the House Loan Facility and Additional Loan Facility Agreement to foreclose, take possession of and sell the mortgaged property, being plot no. ML/ 8025 Masai.a. 3.6 With respect to the Special Personal Loan Agreement, the applicant was granted an order of foreclosure to the effect that the proper1)' known as plot CHINS/2902/7 subject of an -JS- equitable mortgage be conveyed to the bank unconditionally. Costs were awarded to the applicant. 4.0 GROUNDS OF APPEAL 4.1 The appellant has advanced six grounds of appeal framed as follows: 1. The learned trial Judge misdirected herself when she concluded that interest was not exaggerated i.e for the first twelve months on the house loan. for K260,000.00 as it was supposed to be a moratori.um (the appellant was supposed to have the loan delayed by twelve (12} m.onths i.e payment of interest and principal instalments after initial disbursement or one month after completion of construction whichever is earlier. As evidence in. the affidavit in support of originating summons, which was a clear sign of dominion and exploitation by the respondent. Wh.en the learned trial judge would have probably used her discretional powers to order for restructuring of the house loan to take account of the moratorium as per agreement. -J9- 2. The learned trial Judge erred in law and fact when she concluded that there was no compound interest especially on the overdue interest of house loan, which was clear sign of dominion and exploitation due to abrogation of the moratorium agreement on the house loan. This led to poor credit score, financial stress and being in a web of getting more staff loans in an effort to build the house which even upto now is not fully complete. The respondent benefited from this act if the time val.ue of money/net present value which was deducted as interest and principal for the first twelve (12) months is considered. 3. The court below erred in law andfact when it ordered for the specific performance of paying the l.oans within 90 days as an equitable remedy, when the respondent did not have clean han.ds by not payf.ng the appellant his terminal benefits from where the loan sum was to be recovered. This is evidenced from the respondent's p ·ractice and is on record of the court below, where Charles Banda's (former employee -JlO- to the respondent) computation of early retirement final pay exhibited as evidenc,e in the appellants' opposition to originating summons. This should prevent the mortgagee (respondent) fro·m enforcing, through the court process as ·it does not amount to any default by mortgagor (appellant). This applies to all other staff loans that the appellant has with regards the respondent 4. The court below erred in law and fact when it gave the respo·ndent the liberty of foreclosure when the respondent owed the appellant the difference between the terminal benefits and loans which was favourable to the appellant. The respondent shou.ld oblige by following bank practice as in ground there (3)above. The appellant relies on the case of Lubinda Ngala. and another v Anti-Corruption Commission. 5. The court below erred in law and/act by entertaining the affidavit in support of originating summons of the respondent especially that the loans in question were as a result of an employer/employee and not ordinary client/bank relationship, the appellant of -Jl 1- whom retired and was under legitimate expectation of his terminal benefits which was adjudicated by the ln.dustrial Court, a court of equal jurisdiction with the comm.ercial court. Hence, the matter in. the court below is an industrial related matter. 6. The court below erred in law and fact when it failed to appreciate the fact that the respondent was the causer of the appellan.t's inabilit,y to pay the loans and in.terest as they were holding onto his terminal benefits and that they stopped paying the appellant monthly salary a practice against the Zambian. Constitution (as per clause 189 of the Constitution of Zambia (Amendment) Act No.2 of 2016) from where monthly loan deductions were made as the loans were staff loans at staff rate. 5.0 APPELLANTS HEADS OF ARGUMENT 5.1 The appellant relied on the written heads of argument dated 14th January, 2022 wherein it is submitted in support of the 1st ground of appeal that the terms and conditions of the loan show that the loan had a moratorium, therefore the respondent -J12- breached the terms and conditions regarding the repayment of the loan when it made deductions in the same month the loan was sanctioned as the house was not built. 5 .2 On the 2 nd ground, the appellant argued that the Court erred when it made its own assumption that there was no interest overdue on the house loan. 5.3 On the 3 rd ground, the appellant submitted that the Court below erred when it ordered that the judgment debt be paid within 90 days as the evidence on record shows that the appellant had retired from employment. The respondent frustrated the appellant by not paying hi:m his terminal benefits when they knew that he was to dear his loans from the same, this is a clear example of circumvention. 5.4 In support of the 4 th ground, it was submitted that the court below erred 'When it allowed the respondent to foreclose as the terminal benefits owed by the respondent to the appellant would have been sufficient to clear loans. 5.5 On the 5 t h ground, the appeUant raised the issue of res judicata and referred to a ruling which was not appealed against. 5 .6 In support of the 6 th ground, the appellant submitted that he went into early retirement and his terminal benefits have not -J13- yet been paid. He relied on Clause 189 of the Constitution of Zambia, to advance the argument that he was supposed to be retained on the payroll. 5.7 Finally, the appellant submitted that the bank's practice is that whatever is owed to it is deducted from the terminal benefits. ORAL ARGUMENTS BY THE APPELLANT 5.8 At the hearing of appeal, the appellant augmented his written arguments on the 1st ground, stating that the non-compliance with the moratorium on the building loan disadvantaged him in that he was put under financial pressure. For this reason, he expected the Court to restructure the loan so that he still gets a moratorium at the end of the day. 6.0 RESPONDENT'S HEADS OF ARGUMENT 6.1 The respondent relied on the heads of argument dated 11 th February, 2022. Grounds 1 and 2 were argued together as follows: that not only has the appellant not demonstrated how the respondent purportedly exercised dominion and exploitation over him , but he did not raise the issues of dominion , exploitation, moratorium period and breach of the loan agreement in the Court below. Reference was made to the -J14- case of Mus usu Kalenga Building Limited and Another v. Richman's Money Lenders Enterprises 1 in support of the position that issues not raised in the Court below cannot be raised on appeal. 6.2 Counsel further submitted that the clause providing for the repayment of the loan to commence 12 months after the initial disbursement did not suspend the charging of the interest on the loan account, and the respondent did not call up the mortgage within the said period. 6.3 Counsel went on to submit that the lower Court was on firm ground to enter judgment on the figure advanced by the respondent as the appellant did not demonstrate how the interest charged were compounded and neither had he done so on appeal. We were referred to the case of Garrick Refrigeration and Air Condition v. Frest Direct Zambia Limited3 on the need for a party to bring counter figures to the ones he is disputing. 6.4 The arguments in the 3 rd , 4 th and 6 th grounds were that; although the appellant insists that the Court below ought to have offset any sums found due to the respondent against the sums awarded to him by the Industrial and Labour Division, -J15- the judgment relied on, was appealed against by the respondent and a stay of execution obtained. That, the appellant cannot place reliance on a judgment subject of an appeal as the outcome of the appeal could affect the awards. 6.5 Further, the issue of whether the appellant should be retained on the payroll is an issue subject of the said appeal. The question of being retained on the payroll was not even raised in the Court below. 6.6 ln response to ground 5, counsel submitted that in the Court below, the appellant did not raise the issue of the action being res judicata and cannot raise it now. The question that arose in the Court below was whether the appellant's counter claim was res judicata and the Court held in the affirmative and struck out the counter-claim. 6. 7 Counsel further submitted that, the appellant's arguments attacking the ruling of the lower Court dated 28th December, 2020 which he did not appeal against are misplaced, as this appeal is against the judgment of the Court below dated 1st March, 2021. That in any event the action in the Court below cannot be said to be res judicata for the following reasons: Firstly, the cause of action in the Court below arose from the -J16- default on a loan agreement subject of a mortgage and the mode of commencement is by originating summon s. Secondly, the Industrial Relations Court's jurisdiction is limited to purely labour matters as guided by the authorities of N. B Mbazima and Others Joint Liquidators of ZIMCO Limited (in Liquidation) v. Reuben Vera 2 and GDC Logistics Zambia Limited V '. Kanya ta & Others. 3 Counsel contended that the appellant's argument that the respondent ought to have presented its claims against him in the action before the Industrial Relations Division which has no jurisdiction to determine mortgage actions is untenable. 7 .0 OUR DECISION 7. 1 We have considered the evidence on record and the arguments on both sides. 7. 2 The 1st and 2nd grounds of appeal will be dealt with together as they are connected. The appellant alleges that the respondent exercised dominion and exploitation on him. He also raises issues of a moratorium period, exaggerated amounts, compound interest and that the respondent breached the terms -Jl 7- and conditions of the loan agreement resulting in his poor credit score and financial stress. 7.3 Counsel for the respondent argues that all these issues were not raised in the Court below and therefore should not be considered at this stage of the proceedings. It is trite that an issue not raised in the Court below cannot be raised on appeal, the case of Mususu Kalenga Building Limited and Another v. Richman 's Money Lenders Enterprises 1 refers. 7.4 A perusal of the affidavit in opposition to the originating notice of motion reveals that the appellant opposed the amounts claimed by the respondent on grounds that they were exaggerated and interest was compounded. He however did not bring out the issue of the loan having a moratorium period, neither did he demonstrate how the claims were exaggerated and how the interest charged was compounded. It would be difficult to believe the said allegations as the appellant did not provide figures to counter the ones that the respondent gave. The case of Garrick Refrigera ti.on and Air Condition v. Forest Direct Zambia Limited4 cited by counsel for the respondent, where the Supreme Court stressed the importance of the -J18- opposing party to bring counter figures to those of the other party, besides their opinion applies. 7. 5 Therefore, we cannot fault the trial Court for awarding the amount it awarded to the. respondent on the house loan of K260,000,000.00 (unrebased) . 7.6 We however, note that, the moratorium period was a fundamental condition of the contract which the trial Judge ought to have considered. The court of appeal had this to say about a J u dge's exercise of discretionary power in the case of Kalunga Chansa v. Evelyn Hone College,5 "A Judge is vested with inherent discretionary power to make legal decisions according to their discretion. This discretionary power for a Judge as a . decision maker is to make a judgment taking into account all relevant informa.tion. This entails making a choice of approving or not approving. The benefits of judicial Jl 2 discretion are that a. Judge can determine a case fairly based on the consideration of individual circumstances. The only time this exercise of judicial discretion can be impeached is if the Judge did not ex.ercise it ju.diciously. What this means is that a -Jl9- .. failure to take proper consideration of the facts and law relating to a particular matter will be considered to be an abuse of discretion. One must estab·lish that the discretion exercised is an arbitrary one or is unreasonable thereby flying in the teeth of precedent and judicial custom." 7.7 In the case of Nevers Sekwila Mumba v. Muhabi Lungu (suing in his capacity as National Secretary of the MMD), 6 the Supreme Court stated inter alia that it would not reverse the lower Court based on an issue that the trial Court had not ruled upon. It however stated vehemently th at it wou ld however affirm or overrule a trial Court on any valid legal point presented by the record regardless of whether the point was considered or even rejected. 7.8 A moratorium period is a period during which the borrower is not obligated to make payments. However, interest on a loan during the moratorium period generally accrues. We observe that the K260,000.00 house loan had a 12 months moratorium period. The clause for repayment reads as follows: "The loan shall be repaid over a period of 240 months commencing 12 months after initial disbursement or -J20- one m onth after completion of construction whichever is earlier." 7. 9 Our understanding of the above clause is that the bank was not supposed to start making deductions from the appellant's account to service the loan until after 12 months had elapsed or one month after completion of construction. Any deductions made before either of the said events occurred, was in breach of that condition. A perusal of the accounts statement at pages 153 to 158 reveals that the bank started making deductions the sam e month the loan was sanctioned. The lower Court ought to have taken this fact into consideration when exercising its discretion. In the premise, we find that the bank breached the clause on giving the appellant a moratorium period. 7. 10 However, in as much as we accept that the first ground of appeal has merit as regards the bank's breach of the term on moratorium, we take note that the bank did not bring up the mortgage action within the grace period and it did not report the appellant to the Zambia Credit Reference Bureau as a bad debtor so, there was no proof that his credit score was affected. 7.11 We find no merit in the 2nd ground as the appellant did not show how the interest was compounded, neither did he show how the -J21- bank exercised its dominion over him 1n his capacity as a borrower. 7.12 The 3 rd, 4 th and 6 th grounds will be dealt with together as they are inter-related. It is not in dispute that the respondent owes the appellant retirement benefits which he has not been paid yet. The central argument in these grounds of appeal is that the appellant could not pay the loans because the respondent is holding on to his retirement benefits. He suggests that the respondent could offset any sums found due against the retirement package. The respondent's counsel argued that the appellant's reliance on the sums of money awarded to him in an action he had commenced against the respondent in the Industrial and Labour Division is untenable as the awards could change on appeal. In the case of Barclays . Bank v. Weston Lungu Luwi, 7 the Court had this to say on whether a party can rely on a judgment on appeal as a basis for a set off. Can a party raise a set off based on a judgment subject of appeal? I am of the considered view that the same is untenable. I refer to the case of Ba rclays Bank and Suzyo Ngu lube-2011/HPC/0514 whose facts are on all -J22- .. .. fours with this c·ase" ln. th.e above cited case, Judge Wood stated that:: Since the jud9·me)nt of the Industrial Relations Court has been appeal.ed against, it cannot be said to be a finalj'ud'gment and in my view the respondent cannot th.erefore properly rely on th.e defence of set off. The leam.ed Judge went on to dismiss the defence of set off. I am equa,lly of the view that the judgement su.bject of appea.l to the S'up)reme Court is not final and the defence of' set off ra.ised by the Defendant ·1s £. . Jat · . 7.13 This authority is persuasive as it is a High Court Judgment, but we endorse the view that a litigant cannot place reliance on the expected payment on the basis of a judgment subject of an appeal as the outcome of the appeal may affect the award granted by the lower Court. Therefore, in the present case the appeUant cannot rely on the IRC Judgment which determined the payroll issues as it is subject of an appeal. 7.14 As regards, the issue of being removed from the payroll, paragraph 11 of the affidavit in opposition shows that the issue was raised in the Court below contrary to the submission by -J23- • .. counse] for the respondent. However, as stated above the same issue is a]so subject of an appeal as the judgment of the IRC in favour of the appeHant was appealed against. The appellant will only know the amount due to h im and if the same is sufficient t o pay off his debt after the said appeal. We are under a duty to avoid making conflictingjudgment s and therefore we shall avoid making a final judgment on the payroll issue. 7. I S Further, the loans such as the house ]oan and the personal loan had a condition that upon leaving employment, the loan would automatically become due. However, the bank would exercise its discretion to accept payment in installments. So it is not a must that the bank should accept other terms of payment. In the premise we find no merit in the 3 rd , 4 th and 6 th grounds of appeal. 7 . 16 On ground S, we reject the submission by learned counsel for the respondent that the appellant did not raise the issue of the appellant's action being res-judicata and therefore it cannot raise it on appeal because it is trite that a point of law such as this can. be raised at any stage of the proceedings. The appellant also seems to attack the ruling d ated 20th December, 2020 -J24- • which has not been appealed against. Clearly, the appeal before this court is against the judgment dated 1st March, 2021. 7.17 Further the mortgage action cannot be consid ered as an industrial relations one. It may have emanated from an employer/ employee relationship but it involves breach of a loan agreement subject of a mortgage. There are a number of authorities in this jurisdiction on the mode of commencement for such matters. The case of Newplast Industries Commission er of Lands v. Attorney General8 guides that originating summons ought to be taken out for claims subject to a mortgage and goes further to guide the reliefs the High Court can grant. 7.18 The Industrial Relations Court has exclusive jurisdiction in purely industrial relations matters/labour issues. This is what was stated in the case of GDC Logistics Zambia Limited v. Kanyata & Others, 3 "Even though the IRC is now a division of the High Court, it is still guided by its own court rules. The jurisdi.ction of the Industrial Relations Court is limited to settling of labour disputes falling under the Act. It is an alternative forum to the High Court only in cases -J25- of labour disputes. N. B Mbazima and other Joint Liquidators of ZIMCO Limited (In Liquidat ion) v. Reuben Vera SCZ judgment No.6 of 2001 followed." 7.19 We reject the appellant's claim of res judicata as this mortgage action could not be taken before the Industrial Relations Court and it was properly commenced by originating summons. For the preceding reasons, the 5 th ground of appe~ js bereft of merit as well. 8.0 CONCLUSION 8.1 All in all, we find no merit in th is appeal and it is dismissed with costs to be taxed in default of agreement . • ~ •• ••• • 1--. ••••••• ~ M. M. KONDOLO COURT OF APPEAL JUDGE C. K. MAKU U COURT OF APPEAL JUDGE N. A. SHARPE - PH RI COURT OF APPEAL JUDGE -J26-