Dalamere Properties Malawi Limited v Otis Elevator Company Limited and Another (Civil Case 244 of 2014) [2015] MWHC 517 (2 November 2015)

REPUBLIC OF MALAWI IN THE HIGH COURT OF MALAWI ZOMBA DISTRICT REGISTRY CIVIL CASE NUMBER 244 OF 2014 BETWEEN DELAMERE PROPERTIES (MW) LIMITED.....c.csusssssssssessersssstsessesreessasensenseseenecenccnsesseeseenecaseneeny PLAINTIFF AND OTIS ELEVATOR COMPANY LIMITED.......csccsssssscssscssersesnernerersneneentersennseseureneenraneiatectsennners 157 DEFENDANT OTIS PROPERTIES LIMITED......cscsssccssscsorsssssssssennentensescennerssonsausaesueseensentensescnaeanesusnressenaeas 2ND DEFENDANT Coram: H/H Jean Rosemary Kayira Assistant Registrar Counsel Martin Mizeka Chagoma of Counsel for the Plaintiff Counsel Chrispin Chimwemwe Ngunde of Counsel for the Defendants Mr. Tepeka Court Clerk and Official Interpreter RULING INTRODUCTION This Court on 10% June 2015 granted a summary judgment in favour of the Defendants under Order 14 of the Rules of the Supreme Court. The said judgment was in respect of the 80% of the contract price in favour of the Defendants. This was translating to ZA1, 471, 118.40. Since there was part payment of the amount due, the outstanding amount was ZA591, 999.79. As such the warrant of execution subsequent fo the summary judgment stated that interest on ZAS91, 999.79 is 2% above the prime commercial bank lending rate from 10% April 2014 to 10% June 2015. Further interest on ZA591, 999.79 at 5% per year from the date of the judgment to the date of payment. On 14% September 2015, the Plaintiff applied for inter-parties summons for an order to amend or correct judgment or order or ruling of the Court under Order 20 rule 20 of the Rules of the Supreme Court and inherent jurisdiction of the Court. The said application was supported by an Affidavit deposed by Counsel! Martin Mizeka Chagoma. On 19 October 2015, Counsel Chagoma adopted his Affidavit which states that the intention of the parties was for payment of interest on a simple rather than compounded rate. He further deposes that the debt being the price for goods and or services rendered, cannot at law attract interest on a compounded scale. It is his further explanation that the parties have tried to sort out the payable interest rate outside Court. However they have failed because each is proposing a type of interest to the other-SC2. Counsel believes that this dispute arises because of this Court's failure to articulate the applicable type of interest in its judgment of 10" June 2015. Finally he states that the figures in the garnishee proceedings are based on a wrong scale calculation of interest on compounded scale and would render this mode of enforcement of the judgment of 10% June 2015 irregular and wrongful. Counse! Chagoma then prayed that this Court should invoke its inherent power to amend or correct the omission made in its judgment of 10% June 2015 to expressly indicate that the interest payable be at 1% above prime per annum and be calculated on simple and not compound scale in line with SC‘. Counsel also adopted his skeleton arguments where he addresses two issues namely: whether the interest payable on the principal debt herein is simple or compound. Secondly whether the Court can amend and or correct its own judgment. His argument is that in equity interest is not awarded as punishment. The reason is that the other person has been deprived of the use of the money which was due to him or her. He further argues that the interest is intended to reflect the rate at which the Plaintiff would have to borrow money to supply the place of that which was withheld’. This Court has had recourse to the skeleton arguments and the attached judgment to appreciate Counsel's arguments. Counsel Ngunde adopted his Affidavit in opposition to the application by the Defendants. He deposes that the contract between the Plaintiff and the Defendants is silent on whether the interest applicable is simple or compound interest. That the contract is also clear that the 2nd Defendant may recover interest at 2% above the prime commercial bank lending rate or at the maximum rate permitted by law. The said contract is confined to the rate of interest payable and not the type of interest payable. In his oral submission, Counsel ‘Lord Goffin BP Exploration Company (Libya) Limited v Hunt (No. 2) [1982] 7 AER 2 Ngunde argued that what is provided for in the contract is contrary to what the Plaintiff is requesting this Court to determine. The Plaintiff in in its application is praying that this Court should determine the type of interest applicable on default of payment. According to Counsel Ngunde, the Plaintiff is arguing that the parties agreed to use simple type of interest and this is not correct. He further deposes that the Plaintiff did not plead the payment of interest at the rate of 1% above the prime commercial rate and has not appealed against the decision of the Court on the applicable interest rate and this Court has no jurisdiction fo make such kinds of amendments. He then prayed that the Court dismisses the prayer of the Plaintiff and alternatively the Court should make an order correcting its judgment by expressly indicating that the 2-4 Defendant should recover compound interest on the judgment debt at the contract rate and costs. He further adopted his skeleton arguments where he argued that the 2"¢ Defendant is entitled to compound interest because this is a commercial transaction. According to Counsel Ngunde there is no question if the 9nd Defendant is entitled to compound interest because the same was already decided under the law. He finally prayed that the application be dismissed. In the alternative, he prayed that the Court expressly indicates that the 24 Defendant is entitled to compound interest. In response Counsel Chagoma stated that the Court should consider the time or point at which compound interest is payable? Secondly the Court should determine the appropriate interest payable in the present circumstances more especially in light of the agreement between the parties. The Plaintiff could not move to pay because they thought that the some elevator was not installed at all. He submitted that the delay in payment was not because the Plaintiff were profiting from the money. It can hardly be assumed that the Plaintiff invested and profited from the money. Counsel Chagoma submitted that the contract provides for a lesser rate. This shows that the intention of the parties was for payment of lesser interest which is not punitive. REASONED ANALYSIS OF THE COURT The application before this Court is made under Order 20 rule 11 of the Rules of the Supreme Court. The said Order states that clerical mistakes in judgments or orders or errors arising therein from any accidental slip or omission, may at any time be corrected by the Court on motion or summons without an appeal. The judgment of 10% June 2015 has not specified the type of interest applicable when executing the judgment. This is the issue which both parties in this matter have raised. One would ask if it falls within the definition of clerical mistakes as stipulated in the relevant Order. in my opinion the omission of this Court to state the applicable type of interest is a clerical mistake which this Court can correct. As | consider the present application | do not lose sight of the fact that this is a contractual matter. As such the principle that each contract is governed by its terms applies. It is only where the meaning of the term of a contract is ambiguous or illegal that Courts are enjoined to give a meaningful and logical interpretation of the term. | have gone through the entire contract between the parties herein. The contract between the Plaintiff and the 2" Defendant allows the 2"4 Defendant to recover interest at a specific rate. However, it is vividly clear that it is silent on the type of interest applicable where issues of defaults in payment arises. It has only provided for the applicable percentage. Regarding the applicable percentage, the most relevant term of the contract is contained in Schedule “A” Paragraph 5 as follows: “Payment in respect of each invoice shall be due immediately upon presentation thereof. Should any payments not be made on due date you shall pay us interest on the amounts thereof, calculated at 2% above the prime commercial bank lending rate applicable from time to time, or at the maximum rate permitted by law, whichever is the lesser, which interest shall be calculated from the due date of payment until the actual date of payment. The right to recover interest in terms of this clause shall be without prejudice to our other rights in terms hereof.” One of the prayers made by the Plaintiff's Counsel is that this Court should direct that 1% above the prime commercial bank lending rate be applied to the amount due to the 2" Defendant. To this Court, the above term is clearly stipulating 2% above the prime commercial bank lending rate applicable from time to time. This is contrary to the 1% above the prime commercial bank lending rate as prayed for by Counsel Chagoma in his Affidavit in support of this application. It is my humble understanding that alteration of the terms is not in the ambit of this Court's power. | therefore decline the prayer for 1% above the prime commercial bank lending rate. The question that remains is at what rate would the Defendants have borrowed this money which was being withheld from them? It is undisputed that the transaction between the Plaintiff and the 2. Defendant was commercial in nature. As such principles in commercial contracts must apply. The Plaintiff though Counsel Chagoma referred this Court to the case of Shearson Lehman v Maclain Watson (No. 2)2. | have gone through the judgment of that case. | must state that the issue before the Court was the rate at which interest should be paid. It did not deal with the type of interest applicable on default of payment in a commercial transaction as is the case in this matter. | have had recourse to the sentiments in the Kankhwangwa and others v the Liquidator of Import and Export Malawi Limited? which states that the interest should be given if it can be presumed properly that the person withholding the money has profited from using it. In my considered view, whether a person has profited from the money withheld or not does not remove the fact that a person was deprived of his or her money. Secondly This Court holds that the only place envisaged to be available for such borrowing is the bank, Itis common practice in the bank to use compound interest rate and not simple. In other words, if the Defendants were to borrow the said amount of money, they would have it on a compounded interest rate. In that regard, it would therefore defeat the interest of justice and common sense to award the Defendants herein a simple interest rate. | therefore state that the 2" Defendant is entitled to a compounded interest. DETERMINATION Considering the above analysis, this Court dismisses the prayer of the Plaintiff and hold that the 2"4 Defendants is entitled to a compounded interest rate. PRONOUNCED IN CHAMBERS ON 2"° NOVEMBER 2015 @ SAM 2(1990) 3 AN ER 723 3MSCA Civil Appeal No. 4 of 2003