Churchill Floyd Mutale and Anor v Credit Africa Bank Limited (In Liquidation) (Appeal No. 6 of 2002) [2002] ZMSC 167 (11 June 2002)

IN THE SUPREME COURT OF ZAMBIA Appeal No. 6 of2002 HOLDEN AT LUSAKA (Civil Jurisdiction) BET WE EN: CHURCHILL FLOYD MUT ALE TELECARE INTERNATIONAL LIMITED 151 Appellant 2nd Appellant AND CREDIT AFRICA BANK LIMITED (In Liquidation) Respondent CORAM: Chitwa, Chibesakunda and Chitengi, JJS On 13th March, 2002 and 11 th June, 2002 For the Appellant E. M. Kapuka of Messrs Ituna Partners For the Respondent F. S. Mudenda of Messrs Hakasenke & Company JUDGMENT Chitengi, JS d elivered the Judgment of the Court. Cases and Legislation referred to: - 1. Attorney-General Vs Marcus K Achiume 1983 ZR 1 2. Sithole Vs The State Lotteries Board 1975 ZR 100 3. Judgments Act Chapter 8! Of the Laws of Zambia Section 2 In this appeal, we shall refer to the Appellants as the Defendants and the Respondent as the Plaintiff, which is what they were in the Court below. Briefly stated the facts of this case are that on the 21 st March, 1995 the two Defendants made a written undertaking to execute a legal mortgage in favour of the Plaintiff over certain property called Sub Division 1 of Sub : J2 : Division 'N' of Farm Number 691 'Femgrove' situate in Lusaka in the Central Province of the Republic of Zambia, (hereinafter called the property) to secure an overdraft facility of K8,000,000.00 extended to the Defendants by the Plaintiff. The legal mortgage was to be executed by the Defendants at any time the Plaintiff would require the Defendants to execute it. The first Defendant also guaranteed the repayment of the loan. No legal mortgage was executed until 3rd February, 1997 when the parties executed a mortgage in favour of the Plaintiff to secure the maximum sum of K8,000,000.00. Clause 1 of the mortgage stipulated, inter alia, that the loan was to be repaid with interest at current rates. From the papers on file it appears that by 15th June, 1995 the Defendants were already in default. Despite demands by the Plaintiff that the Defendants liquidate the loan facility and interest etc, the Defendants failed or neglected to pay. Consequently, the Plaintiff took out an Originating Summons on 24th April 1997 to enforce the mortgage. At the commencement of this action the Plaintiff alleged that Defendants were owing K25,988,264.76 in advances and K42,163,168.34 as interest. In total the Defendants were owing K54.37 l.93 l.54. The Defendants opposed the Originating Summons. The second Defendant's General Manager, one Chewe Mutale, swore an Affidavit conceding that an overdraft facility of K8,000,000 was extended to the Defendants by the Plaintiff but said that although the second Defendant ran the facility within the limit, the facility was abruptly stopped by the Plaintiff. According to him that amounted to frustration and the mortgage could : J3 : therefore, not be executed. Mr. Chewe Mutale also conceded that as at 13th June, 1995 the Second Defendant had incuITed K?,696,261.55 by way of overdraft. He averred that the third party mortgage executed on 3rd February, 1997 was executed without the consent of the second Defendant. The Certificate of Title for the property was deposited with Finance Bank. Messrs Jitesh Naik redeemed a loan of Kl,714,277 the second Defendant owed Finance Bank and obtained the Certificate of Title for the property when they were not acting on behalf of the second Defendant but on behalf of the Plaintiff. The Defendants disputed the amount of K54,371,93 l. 54 and the interest applied but were willing to pay K7,696,261.55. Mr. Mapate Mapate an officer of the Plaintiff conceded that the facility was cancelled but explained that this was due to the unsatisfactory manner in which the accoW1t was being fW1 and that by that time the Defendants had already a debited balance in the account as admitted by the Defendants in Paragraph 7 of their Affidavit. (The amount admitted in this paragraph is K?,696,261.55). The third party mortgage was executed by the Defendants. Although the Certificate of Title had been deposited with Finance Bank the Defendants were aware of the Plaintiffs intentions to discharge the same from Finance Bank (see exhibit MMI). The Certificate of Title for the property was the security for money disbursed to the Defendants. The Defendants having failed to discharge the Certificate of Title with Finance Bank the Plaintiff instructed Messrs Jitesh Naik Advocates to discharge the Certificate of Title with Finance Bank and have it as security for the money disbursed to the Defendants. The Certificate of Title was not obtained without consent of the Defendants because it was the Defendants who told : J4: the Plaintiff that the Certificate of Title was with Finance Bank. The mortgage provides for payment of interest at the rates that change from time to time according to market conditions. When the matter first went before the learned trial Judge he was skeptical about the amount claimed. The learned trial Judge did not understand how the starting figure was K25,988,264.76 when in fact the loan facility was K8,000,000.00. According to the learned trial Judge the starting figure should have been K8,000,000.00. We do not see why the starting figure should have been K8,000,000.00. The starting figure should have been K7,696,264.76 because that was the amount actually advanced. Be that as it may the learned trial Judge ordered that the Plaintiff do render an account to the Defendants. That was not the end of the matter. The parties later went before the learned trial Judge again. In a brief Ruling the learned trial Judge found that the Defendants were indebted to the Plaintiff and held that the issue of fraud raised by the Defendant relating to the mortgage deed and the Certificate of Title was feeble. The learned trial Judge also found that the only issue was whether the Defendants did acquiesce to compound interest. The learned trial Judge found that the Defendant's own bank ledger cards running from 12 June, 1995 showed that the Defendants did acquiesce to compound interest. After making those findings the learned trial Judge entered Judgment for the Plaintiff to recover all the monies up to the date of the Ruling, which was 22nd January 2001, with simple interest after Judgment at 48%. : J5 : Mrs. Kapuka for the Defendants argued one ground of appeal which is that the learned trial Judge erred when he held that the only issue was one of acquiescence and that the Defendants acquiesced. It was Mrs. Kapuka's submission that the learned trial Judge identified the issue of forgery of the mortgage, the obtaining of the Certificate of Title without consent of the Defendants and whether the Defendants acquiesced to compound interest. It was Mrs. Kapuka's submission that the learned trial Judge failed to make a proper evaluation of the evidence when he dismissed the issue of forgery as feeble. Mrs. Kapuka further submitted that the first Defendant in his evidence denied signing the mortgage deed. The Plaintiff did not give evidence to show how the first Defendant and Mr. Hakasenke came to sign the mortgage deed. The fact that the first Defendant did not sign the mortgage deed was not controverted. Mr. Hakasenke having signed the mortgage deed the learned trial Judge should not have taken the issue of forgery lightly. An unbalanced evaluation of evidence where only the flaws of one side but not of the other are considered as misdirection which a trial court should not make and it entitles the higher court to interfere: Attorney General Vs Marcus K. Achiume(l). On acqmescence Mrs. Kapuka submitted that the Plaintiff did not acquiesce to compound interest. The facility was stopped after four months. This is confirmed by the Plaintiff. In reply, Mr. Mudenda submitted that the appeal attacks findings of fact. It was Mr. Mudenda's submission that an appellate court will not upset : J6 : findings of fact by a trial Judge who had the opportunity to see the witness unless it is satisfied that the findings in question were either perverse or made in the absence of any relevant evidence or upon a misdirection of facts or that they were findings, which on a proper view of the evidence, no trial court acting correctly could reasonably make. Mr. Mudenda's submitted that none of these conditions were present in this case. The first Defendant signed the undertaking and the guarantee. Consequently, Mr. Mudenda submitted, the learned trial Judge cannot be blamed for characterizing the issue of forgery as feeble and casual. He submitted that fraud alleged in a civil case must be proved on a standard higher than that required in other civil matters: Sithole Vs The State Lotteries Board(2). On compound interest Mr. Mudenda submitted that the first Defendant said that he was receiving and inspecting bank statements. The bank statements showed interest but he did not complain about compound interest because the account was running for only four months. Mr. Mudenda submitted that there could be no better evidence of acquiescence than this. The K21,507,206.37 on the letter of demand dated 18th March, 1996 is the amount secured by the mortgage. The letter clearly states that the interest as at that date was 84% per annum. (In fact the letter stating interest at 84% per annum is dated 15th June, 1995). Finally, Mr. Mudenda submitted that because this appeal only attacks findings of fact which are not perverse it should be dismissed. The facility was stopped for failure to pay.