Hubrey Milton Musal and Ors v AB Bank Zambia Limited (2017/HPC/0393) [2023] ZMHC 94 (29 June 2023)

IN THE HIGH COURT FOR ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN 2017/HPC/0393 HU BREY MIL TON MU SALE PLAINTIFF 1--" SHIRLEY DAKA ic.-,'i~~~ ,:,b No PLAINTIFF MAPEPE BIBLE COLLEGE ,-.........__= 3Ro PLAINTIFF TRUSTEES AND AB BANK ZAMBIA LIMITED DEFENDANT Coram: Hon Lady Justice Irene Zeko Mbewe Appearances For the 1st Plaintiff For the 2nd Plaintiff For the 3rd Defendant: For the Defendant In Person NIA NIA Mr C Chungu of Messrs Nsapato and Company and Mr E K Bwalya In House Counsel JUDGMENT Cases referred to: 1. Galaunia Farms Limited v National Milling Company Limited [2004} ZR 1 2. Wilson Masauso Zulu v Avondale Housing Project [1982] ZR 179 3. L 'Estrange v Gracoub [1934) 2 KB 394 4. Afrope Zambia Limited v Anthony Chate and Ors Appeal No 160/2013 5. lndo Zambia Bank v Leonard Mwe/wa Witika and Others SCZ Appeal No 16 of 6. Santley v Wilde [1899] 2 Ch D Jl I Page 7. Reeves Malambo v PATCO Agro Industries Limited Judgment No 20 of 2007 8. Cavmont Bank Limited v Cereal Millers and Farms Limited and Others CAZ Appeal No 277 of 2021 v 9. Colgate Palmolive (Z) Inc v Abel Shemu Chika and 110 Others Appeal No 181 of 2005 10. BP Zambia Pie v Expendito Chi pasha and 235 Others Selected Judgment No 57 of 2018 11. Y. B and F Transport v Supersonic Motors Limited [2000] ZR 22 Legislation and other works referred to: 1. High Court Rules, Cap 27 of the Laws of Zambia 2. Judgment Act, Cap 81 of the Laws of Zambia 3. Chitty on Contract 4. Halsbury's Laws of England 4th Edition 5. Black's law Dictionary, 11'h Edition 6. Edwin Peel on the Law of contract, 14th Edition [1.1] This case has a protracted history punctuated by non-compliance with orders for directions mostly by the Plaintiffs, application for dismissal for want of prosecution, application for Judgment on admission, staying proceedings, an appeal to the Court of Appeal and finally a trial in the High Court. The Plaintiffs commenced legal action against the Defendant claiming for the following reliefs: i) ii) iii) A declaration that the manner in which the Defendant handled the Plaintiff's application for the loan facility amounts to unfair trading practices; For an order to re-open the agreements entered into between the Plaintiffs and Defendants for being extortionate; An order compelling the Defendant to rectify the anomalies by the two loans by consolidating the two payment plan into one so that a single interest rate is payable on the two loans; iv) An interim injunction restraining the Defendant from selling and/or foreclosing on the assets used as security in the loan facilities. J2 I Page v) Damages for loss of savings occasioned by the anomalies caused by the Defendant; vi) Costs; vii) Any other relief this Court may deem fit. [1.2] In the pleadings as contained in the statement of claim, in February 2017 the 3rd Plaintiff applied for a loan of K1 ,000,000.00 repayable with interest within 2 years. The purpose of the loan was to undertake renovations or improvements to five teachers houses which were in a dilapidated state. [1.3] The Defendant was provided with all architectural drawings, bills of quantities, artist impression designs, contractor's schedule of work which suggested three (3) months completion period, and a quotation from the same preferred contractor. The total cost was slightly above K1 ,000,000.00 and part of repayment was to come from income derived from rentals from the same house after renovations. [1.4] On 23rd February 2017, the Defendant considered the application and approved it but instead of the loan being granted to the applicant which is the 3rd Plaintiff, the Defendant ignored the applicant and approved the loan in the names of the 1st and 2nd Plaintiff and only approved K500,000.00. At the time of signing, the 3rd Plaintiff raised an objection to the Defendant's decision because the terms were unfavourable. [1.5] A verbal assurance was made by the defendant that there was no problem that the loan had been approved in the 1st and 2nd Plaintiff and encouraged them to sign the agree and should they make another application for the balance, the Defendant would approve. The 1st and 2nd Plaintiff signed the credit contract and applied for K500,000.00. to satisfy the costs of the works to be undertaken. [1.6] Two months later, on 27th April 2017, the Defendant considered and approved the application with the re-payment period of two (2) years but never addressed the concerns raised over the initial loan. Whilst waiting for approval of the second loan, the Plaintiffs managed to Bl Page service the two monthly instalments during the period between march and April 2017 of K120,000.00. [1 . 7] The Defendant was approached over the issue of the re-payment period and was requested to consolidate the two loan amounts so that the two could be serviced within two (2) years but the Defendant refused. This meant that the Plaintiff was required to service the loan at two different rates, namely the loan of K500,000.00 instalment payments were K60,786.79 per month for ten (10) months and for the K500,000.00 the payment was K37, 112.08 per month for 12 months. [1.8] It was agreed the Plaintiffs would service the loans from the rentals from the renovated teachers houses and the Plaintiff would be given a three (3) months moratorium before repayment could commence. [1.9] However, the Defendant started computing interest and making demands for repayments before the moratorium period and issued a demand on 31 st July 2017 for repayment of arrears. The demands were never accompanied with statements showing the amounts due and how interest was computed. [1.1 0] That some of the terms of the credit contracts are unfair and inconscionable such as clauses 8 (4) and 10 of the initial contract dated 23rd February, 2017 and clauses 8.5 and 10 for the second credit contract dated 27th April 2017. The Defendant became increasingly hostile and aggressive towards the Plaintiff. [1 .11] The conduct of the Defendant was misleading and deceptive in the manner it handled the approval of the loan in issue. The Plaintiffs was having difficulties in servicing the loans and decided to stop doing so until the disputes were resolved. [1.12] The Plaintiffs have at no time refused to repay the loans but simply asked the Defendant to rectify the anomalies by consolidating the re-payment period so that the two loans would attract one interest as was intended. That the Defendant's refusal to rectify the anomaly is calculated to facilitate foreclosure on the assets used as security. Complying with the Plaintiffs' demands would lead to monthly instalments of K24,000.00. 14 I Page [1.13] As a result, the Plaintiffs have suffered loss and damage. [2.0] Hearing [2.1] At the commencement of trial on 26th April, 2023, the 1st Plaintiff was present but there was non-appearance from the 2nd and 3rd Plaintiff and no explanation for their failure to attend Court on the material date. The 1st Plaintiff admitted the 2nd Plaintiff is his wife and had travelled to the Copperbelt. Whilst the 1st Plaintiff is a trustee in the 3rd Plaintiff. [2.2] I proceeded to determine the matter as I was satisfied the 2nd and 3rd Plaintiff were aware of the date for the trial as at the material time they were represented by Counsel who was issued a notice of the trial date. [2.3] Orders for direction were issued and by Consent Order dated 3rd February 2023, the Plaintiffs failed to file any witness statements or skeleton arguments. [3.0] Plaintiff's evidence [3.1] The 1st Plaintiff sought an adjournment to enable him engage Counsel as his Counsel had earlier withdrawn and was therefore not ready to proceed. I declined to grant an adjournment as the matter had been adjourned several times at the instance of the Plaintiffs. l found no compelling and exceptional circumstances to warrant the granting of an adjournment. [3.2] [3.3] The 1st Plaintiff did not file any witness statement from the time orders for direction were issued and this is despite a Consent Order of 3rd February 2023. l hasten to state that during trial, the Court was aware the 1st Plaintiff was unrepresented and throughout the trial, the Court explained what was expected of him in terms of his evidence and cross examination of his opponent. I am also acutely aware the 1st Plaintiff is a lay person. However, he is the 1st Plaintiff who sued the Defendant and a witness of fact. [3.4] In cross examination, the 1st Plaintiff admitted the 2nd Plaintiff is his wife. He confirmed she had made an application to the Defendant for loans. When shown the loan application form , he could neither JS I Page confirm or deny the signature appearing was his. He confirmed he entered into an agreement with the Defendant but due to the passage of time, could not recall how much he had received. [3.5] When shown the credit disbursement transfer and whether it was his signature, the 1st Plaintiff denied it was his. He admitted the Defendant approved K500,000.00 and not K1 ,000,000.00 applied for. He confirmed two loans were availed to him of K500,000.00 each. He could not recall how many payments he had made. [3.6] [3. 7] [3.8] In regard to the claim on unfair trading practices, the 1st Plaintiff could not remember any unfair trading practices but stated the Defendant was aggressive and hostile towards him. He had no evidence to support his assertion of the Defendant's hostility. He maintained he obtained a loan as trustee in the 3rd Plaintiff. The 1st Plaintiff could not recall whether the Defendant had offered to assist him with the consolidation of the loans. On the renovations undertaken by the 3rd Plaintiff, the 1st Plaintiff could not confirm this and suggested the 3rd Plaintiff was in a better position to testify as to what prevailed. The 1st Plaintiff told the Court the Defendant provided part of the financing for the renovations including other financial institutions. When queried as to whether monies had been paid to the Defendant, the 1st Plaintiff responded the issue had not been resolved as there was a dispute. [3.9] There was no re-examination and the 1st Plaintiff closed his case. [4.0] 2nd Plaintiff [4.1] The 2nd Plaintiff was not present at the trial and there was no explanation for her non-appearance. Since she was represented by the then Counsel I was satisfied she was aware of the trial date. I proceeded pursuant to Order 35 rule 3 High Court Rules, Cap 27 of the laws of Zambia. [5.0] 3rd Plaintiff [5.1] Similarly, the 3rd Plaintiff was not present at the trial and there was no explanation for its non-appearance. Since the Plaintiffs all had the same Counsel who was aware of the trial date, similarly, I J6 I Page proceeded pursuant to Order 35 rule 5 High Court Rules, Cap 27 of the laws of Zambia. [6.0] Defendant's evidence [6.1 J OW was George Mhango the Head Small and Medium Enterprises and Corporate Banking in the Defendant bank. He adopted his amended witness statement filed into Court on 10th February, 2023 as his evidence in chief and it was admitted into evidence. [6.2] [6.3] In summation, he avers that on 9th February 2017, the 1st Plaintiff submitted a loan application seeking K1 ,000,000.00 and upon evaluation it was assessed that the appropriate amount would be K550,000. A loan agreement was entered for the sum of K550,000.00 repayable in 10 months. The same was disbursed on 13th April 2017. The 1st Plaintiff made a second application with the 2nd Plaintiff as a co-borrower and the same was duly signed off by both of them. The Defendant disbursed KS00,000.00 to the 1st Plaintiff repayable over a period of 24 months. The loans were secured by four properties and some office furniture (pages 19-23 Defendant's bundle of documents). [6.4] DW1 testified that the pt and 2nd Plaintiff voluntarily agreed to the terms of the loan agreements and appended their signature to the documents and surrendered the certificate of title to the said properties to the Defendant. The Defendant consistently treated the Plaintiffs fairly and reasonably in line with the provisions of the loan agreements and trade practices. The Defendant never took any action to enforce its rights under the loan agreements. [6.5] [6.6] The 1st Plaintiff after making 2 monthly instalments defaulted on the repayment of the first loan. In relation to the second loan, neither the 1st and 2nd Plaintiff have made any payments (pages 1- 3 Defendant's bundle of documents). That the 1st and 2nd Plaintiff are in breach of the credit contract for both loans. The Plaintiffs had constantly indicated they would service the loan from rentals received and sell of plots but this was not reduced in writing. J7 IP age [6-71 DW1 states both loans stand at K10,307,608.30 (page 1-3 Defendant's notice to admit documents). [6-8] [6.9] Th~ Plaintiffs have unjustly held on to the principal sums for a period of over 6 years resulting in the Defendant being unable to on-lend the sums to deserving micro and small to medium enterprises. The Defendant is desirous of foreclosing or selling the properties to recover the outstanding sums. The Defendant counterclaims a total sum of K10,307,608.30 and is entitled to foreclose and sell the mortgaged properties in accordance with the agreements between the parties. The Defendant has suffered loss, damage and inconvenience as a result of the non-payment of the loan amounts that need to be remedied. [6.1 O] During the trial, DW1 reiterated that the Bank caters for SM Es and the loan average size is K10,000.00. He lamented that where loans are not repaid by any borrower, it has an effect on the performance of the Bank leading to non-performing loans and subsequently the Bank operating at a loss. The 1st Plaintiff did not cross examine the witness. [6.11] After the one witness, the Defendant closed its case. [7.0] Submissions [7.1] The Plaintiffs did not file any written submissions. I am grateful to the Defendant for their well written submissions which have been useful in the determination of the matter before me. I shall proceed to discuss some relevant legal principles to the facts at [8.0] [8.1] hand and my findings. Analysis, law and consideration 1 have carefully considered the pleadings and Defendant's submissions. I shall proceed to determine and analyse each relief sought and refer to the substantive law applicable. [9.0] A declaration that the manner in which the Defendant handled the Plaintiff's application for the loan facility amounts to unfair trading practices JS I Page [9.1] [9.2] [9.3] [9.4] The Plaintiffs seek a declaration that the manner in which the Defendant handled the Plaintiff's application for the loan facility amounts to unfair trading practices. The burden of proving an allegation of unfair trading practices vests upon the person who claims to have been wronged. In order to succeed, the Plaintiffs' have to provide evidence of unfair trading practices or representation on the part of the Defendant. I am reminded of the case of Galaunia Farms Limited vs National Milling Company Limited (1l and Wilson Masauso Zulu v Avondale Housing Project 12i, where the Supreme Court reaffirmed the principle that the burden to prove an allegation lies with the one who alleges. The 1st Plaintiff is suggesting he was unfairly treated by being given a lower amount than what was requested. Secondly, the Defendant portrayed a very aggressive attitude towards him. I quickly dispel this notion as there is no evidence of the alleged unfair treatment by the Defendant. If anything, the unfairness was not properly articulated in the pleadings or during trial. The 1st Plaintiff testified the amounts given were less than those requested. The Defendant justified this by stating that after an evaluation and assessment, a decision was made to give the 1st and 2nd Plaintiff a loan of K500,000.00 as opposed to the K1 ,000,000.00 applied for by the 1st Plaintiff. [9.5] At page 1 and 2 of the Defendant's bundle of documents is a loan application form in the name of the 1st Plaintiff applying for the sum of K1 ,000,000 and K500,000 signed on 9th February 2017 and 3rd April 2017 respectively. The loans are accompanied by a credit contract appearing at pages 3-6 for the first loan of K850,000.00 and at pages 7-15 of the second loan of K500,000.00. The two credit contracts are signed by the 1st and 2nd Plaintiff. In cross examination, he was unable to confirm whether the signature on the form was his or not. [9.6] I consider Counsel for the Defendant is correct to submit on the basic principle that parties should be bound to agreements they J9 I Page freely and voluntarily enter into and placed reliance on the case of L'Estrange v Gracoub (3l where it was held that: " .. . The Plaintiff, having put her signature to the document, and not having been fraud or misrepresentation, cannot be heard to say that she is not bound by the terms of the document because she did not read them." induced by any [9. 7] In line with the learned authors on contracts, in Chitty on Contract it was stated as follows: "where the agreement of the parties has been reduced in writing and the document containing the agreement has been signed by one or both of them, it is well established that the party signing will ordinarily be bound by the terms of the written agreement whether or not he has read them or not. He is ignorant of their precise legal effect." [9.8] [9.9] I found the 1st Plaintiff very elusive and chose not to answer any questions to assist the Court in making a just determination. Under cross examination, the 1st Plaintiff feigned ignorance as to whether it was his signature in the credit contract. In my considered view, the 1st Plaintiff cannot re-sile from the terms of the credit contract in light of the fact the Defendant disbursed the loan to the 1st and 2nd Plaintiff. I am fortified in my finding by Halsbury's Laws of England 4th Edition at paragraph 687 where it states that: "the general rule is that a person is stopped by his signature thereon from denying his consent to be bound by the provision contained in that deed or other document." [9.1 OJ At pages 18-21 of the Defendant's bundle of documents is a collateral contract between the Defendant and 3rd Plaintiff where the 3rd Plaintiff steps in as a guarantor. Clause 1.1 states as follows: "The Owner of the collateral covenants that he/she will pay the bank on demand all moneys and discharge all obligations and liabilities whether actual or contingent, due to the Bank at the JlO I P age date of this Agreement or thereafter owing or incurred to the Bank by the borrower under the credit agreement when they are due ....... " [9.11 l The collateral is described in clause 2.1 of the collateral contract and includes office furniture and mortgaged properties namely Subdivision G of Subdivision D of Farm 411a, Lusaka (certificate No 24681 ); Subdivision K of Subdivision D of Farm 411 a, Lusaka (certificate No 24689); Subdivision H of Subdivision D of Farm 411 a, Lusaka (certificate No 24683) and Subdivision E of Subdivision D of Farm 411a, Lusaka (certificate No 246781) registered to the 3rd Plaintiff. [9.12] The collateral contract appears to have the same signature as the 1st Plaintiff who signed on behalf of the 3rd Plaintiff. The collateral is used to secure the two loans. [9.13] The Plaintiffs allege the loan should have been in the name of the 3rd Plaintiff but the Defendant insisted it should be in the 1st and 2nd Plaintiff. I find this hard to believe as the 1st and 2nd Plaintiff had the freedom of choice to contract and should have simply walked away from the whole transaction with the Defendant. Under cross examination, the 1st Plaintiff testified he was given verbal assurances this would be reversed but never came to fruition. This remains a mere assertion and not backed by any credible evidence. [9.14] In my view, the 1st and 2nd Plaintiff have not adduced any evidence proving their rights were violated by the Defendant. In the premise and in view of the discussion above, I decline to grant a declaration that the manner in which the Defendant handled the Plaintiff's application for the loan facility amounts to unfair trading practices. The claim is without merit and fails. [10.0] For an order to re-open the agreements entered into between the Plaintiffs and Defendants for being extortionate Jll I Page [ 1 l The - 1st and 2nd Plaintiff seeks an order to re-open the agreements entered into between the Plaintiffs and Defendant for being extortionate. [ -2] The word extortionate as defined in Black's Law Dictionary 11 th Edition cross references to loan transaction and states: ' "the practice of lending money at excessive and especially usurious rates, and often using threats or extortion to enforce repayment" (10.3] The Court can strike out an unconscionable contract or those that are so unfair. However, the Court should be mindful its duty is not to re-write contracts but to enforce them as parties are bound by the terms of their contracts. This has been an old age practice. (10.4] The Plaintiffs failed to lead any evidence to support their claim that the agreements were extortionate in nature. There is no cogent evidence adduced to support the alleged claim that the Defendant had extortionate tendencies towards the Plaintiffs. [10.5] I see no basis to re-open the agreements entered into between the Plaintiffs and Defendant for being extortionate. The claim is without merit and is dismissed accordingly. [11.0] An order compelling the Defendant to rectify the anomalies by the two loans by consolidating the two payment plan into one so that a single interest rate is payable on the two loans [11 .1 J The Plaintiffs seek an order compelling the Defendant to rectify the anomalies in the two loans by consolidating the two payment plans into one so that a single interest rate is payable on the two loans. [11.2] It is not in dispute the 1st and 2nd Plaintiff were availed a loan the first one of K500,000.00 and the second one of K550,000.00. The respective loans had different terms including the interest rate chargeable. [11 .3] A perusal of the first loan shows the interest was fixed at 4 .25% per month whilst the second loan was at 5% per month. This translated to different tenors of the loan and monthly instalments. [11.4] . t'fi d es 1 1e they requested the Defendant to The 1st Plaintiff t consolidate the loans without success. In the present scenario, the Defendant has the sole discretion to consolidate any loans and any failure to do so does not by any stretch of imagination constitute an anomaly. The Defendant in its defence stated the 1st Plaintiff only requested to have the two loans consolidated into one loan payable over a period of 6 months and not 2 years after both loans had fallen past the due date. This evidence was never challenged by the Plaintiffs and I accept it. In any case, the Defendant was within its rights to reject the request for consolidation of the loans. PW1 did not adduce any evidence or put across any documentation to support this assertion. [11 .5] I decline to grant an order compelling the Defendant to rectify the alleged anomalies in the two loans by consolidating the two payment plans into one so that a single interest rate is payable on the two loans. (12.0] An interim injunction restraining the Defendant from selling and/or foreclosing on the assets used as security in the loan facilities [12.1] The Plaintiffs seek an interim injunction restraining the Defendant from selling and/or foreclosing on the assets used as security in the loan facilities. [12.2] There is no cogent evidence to support this claim and I find no merit in the claim. The same lacks merit and fails. [13.0] Damages for loss of savings occasioned by the anomalies caused by the Defendant [13.1] The Plaintiffs seek damages for loss of savings occasioned by the alleged anomalies caused by the Defendant. [13.2] It is trite that damages are awarded where there has been a breach. Therefore, to successfully claim damages, a party should show the existence of a contract, the said contract was breached and the party has suffered damage or loss as a result of the breach. This J13 I Page implies that a party has to make out a case relating to all the elements of the claim. [ ·31 Even though the Plaintiffs claim for damages for loss of savings, they have not led any evidence to support their claim. The same lacks merit and is unsuccessful. (14.0] Other reliefs the Court may deem fit [14.1] The Plaintiffs seek any other relief the Court may deem fit. Upon consideration of the Plaintiffs case and evidence led, I am of the view there are no further reliefs to be awarded. This claim is without merit. [15.0] Costs [15.1] The Plaintiffs seek costs of this action. It is trite law that costs are awarded at the discretion of the Court. I am guided by the case of Afrope Zambia Limited v Anthony Chate and Ors !4l where the Court held: "It is a settled principle of law that a successful party will not normally be deprived of his costs unless there is something in the nature of the claim of him to be granted costs. " [15.2] see no reason to depart from this principle of the law. The Plaintiffs having failed in their action, I award costs to the Defendant. [16.0] Disposal [16.1] On a balance of probabilities, the Plaintiffs have failed to prove their case against the Defendant. For the avoidance of doubt: i) ii) I decline to grant a declaration that the manner in which the Defendant handled the Plaintiff's application for the loan facility amounts to unfair trading practices; I decline to grant an order to re-open the agreements entered into between the Plaintiffs and Defendants for being extortionate; J14 I P age I iii) iv) v) I decline to gra t rectify th t wo payment pla · t payable on the two loans· n . an_ order compelling the Defendant to e anomalies in the two loans by consolidating the n in o one so that a single interest rate is decline to grant an interim injunction restraining the Defendant from selling and/or foreclosing on the assets used as security in the loan facilities· ' I decline to award damages for loss of savings occasioned by the anomalies caused by the Defendant as it is without merit; vi) vii) viii) I decline to award costs to the Plaintiffs. Costs are awarded to the Defendant to be taxed in default of agreement; I decline to grant any other relief the Court may deem fit. Leave to appeal granted. [17 . O] Counterclaim [17 .1] The Defendant's counterclaim is brought pursuant to Order 30 rule 14 High Court Rules, Cap 27 of the laws of Zambia. By Order of the Court of Appeal, the matter proceeded by way of writ of summons. The Defendant counterclaims for the following reliefs: 1. An Order that the 1st Plaintiff is in breach of the credit contract No CR-01071000900-20 and Credit Contract No CO- to a total principal sum of 01071000924-45 amounting K985,765.67 the total interest amount of K513,262.45 total overdue payment of K6,996,059.14 and total expense of K48,000.00 therefore giving an outstanding amount of KB,543,087 .16 due and owing as at 16th February 2022 and he continued accrued overdue payment up to date of full repayment. 2. An Order for foreclosure or sell of the mortgaged leasehold properties to recover repayment of the outstanding loans together with the accrued interest and overdue payment thereof. JlS I Page , 3. An Order that a receiver and manager of the mo, tgagcd leasehold properties be appointed. 4. Damages for breach of the credit contract No CR 01071000900-20 and credit contract No CO-01071000924-45 executed between the Defendant and the Plaintiff. 5. Interest on the sums found to be due [17.2) In the amended counterclaim, the Defendant avers that by virtue of the credit contract No CR-01071000900-20 and Credit Contract No CO-01071000924-45 and Guarantee Agreements No GU- 01071000900-20 made between the Defendant and Plaintiffs and dated 23rd February, 2017 the 1st Plaintiff did obtain a loan from the Defendant in the sum of K550,000.00 (1 st loan) payable in 12 months which lapsed on 13th March, 2018. (17.3] Further, by virtue of credit contract No CO-01071000924-45 and Guarantee Agreements No GU-01071000900-20 made between the Defendant and the Plaintiffs dated 27th April 2017, the 1st Plaintiff obtained a loan from the Defendant in the sum of KS00,000.00 (2nd loan) payable in 24 months which lapsed on 13th May, 2018. [17.4] The loan amounts were secured and by virtue of the agreements amounted to mortgages executed by both parties and dated 23rd February 2017 and 27th April 2017 respectively. [17.5] As at 16th February 2022, the statement of accounts between the Defendant and the 1st Plaintiff was as follows for the first loan: principal was K485, 765.67; interest K121,880.03 and overdue payment K3, 796,501.55 totalling K4,404, 14 7.25. [17.6] In respect to the second loan, the principal was K500,000.00; interest K391,382.32; overdue payment K3, 199,557.59; expenses K48,000.00 totalling to K4, 138,939.91. [17. 7] The Defendant avers the total amount outstanding as at 16th February, 2022 is KB,543,087.16 and the 1st Plaintiff has since 116 I Page I ( [17.8] defaulted in the re a credit cont t p yment of the loan thereby breaching the rac s, and the debt continues to accrue interest. The Defendant avers that due to the 1st Plaintiff's default in the repayment of the loan, the 1st and 2nd Plaintiff's security for repayment of the loan in the form of mortgaged leasehold properties have become enforceable by foreclosure or sale. The mortgaged properties relate to Subdivision G of Subdivision D of Farm 411a, Lusaka (certificate No 24681); Subdivision K of Subdivision D of Farm 411a, Lusaka (certificate No 24689); Subdivision H of Subdivision D of Farm 411 a, Lusaka (certificate No 24683); and Subdivision E of Subdivision D of Farm 411 a, Lusaka (certificate No 246781 ); [17 .9] According to the Defendant, it has suffered loss arising from the Plaintiffs' default in repayments. [17 .13 O] There was no defence to counterclaim on record from the 1st, 2nd and 3rd Plaintiff. [18.0] Analysis, law and conclusion [18.1] An Order that the 1st Plaintiff is in breach of the credit contract No CR-01071000900-20 and Credit Contract No CO-01071000924-45 amounting to a total principal sum of K985, 765.67 the total interest amount of K513,262.45 total overdue payment of KG,996,059.14 and total expense of K48,000.00 therefore giving an outstanding amount of KB,543,087.16 due and owing as at 16th February 2022 and he continued accrued overdue payment up to date of full repayment. [18.2) The Defendant claims damage for breach of credit contract. He learned author Edwin Peel on the Law of Contract, 14th Edition states at page 828 that "A breach of contract is committed when a party without lawful excuse fails or refuses to perform what is due from him under J17 I P age I the contract, or performs d from performing A b party to cl . d . aim amages" . . efectJve/y or mcapacitates himself reach of contract may entitle the injured From the cited auth injured . ·t . on Y, where there is breach of contract, an party is entitled to claim damages. 3 - ] [ In a~plying the law to the present facts, it is apparent the Plaintiffs are rn default as they have not been servicing the loan resulting in the a~cum~lation of interest on the principal amount. In dissecting what 1s owing to the Defendant, a claim is made of K6,996,059.14 as the overdue payment. What is this overdue payment? [18.4] Under clause 3.3 of the credit contract dated 23rd February 2017 between the 1 si, 2nd Plaintiff and the Defendant, it states as follows: "Payments due under the Agreement will be covered in the following order: recovery fees, interests and principal" [18.5] Clause 5 is sub-titled overdue payments, legal costs and expenses. Specifically, clause 5.1 provides as follows: "Overdue instalments resulting from non-adherence by the borrower (s) to the payment plan shall attract interest at a rate of 0.5% per day calculated on the portion of the instalment which comprises the repayment of the principal sum for each day it remains unpaid." [18.6] The same provisions are found in article 3.3 and article 5.1 of the credit contract dated 2?1h April, 2017 between the 1st, 2nd Plaintiff and the Defendant herein. A perusal of the 1st Plaintiff's status of loan shows the overdue payment stands at K2,589,378.01 as at 7th October, 2020 (page 4 of the Defendant's bundle of documents). [18. 7] From a reading of the credit contracts, the parties agreed that any overdue instalment resulting from failure to meet the payment plan shall attract interest at 0.5% per day on the amount that remains unpaid. The purpose of this type of interest is to compensate the lender or insulate it from late payments by a borrower. J18 I Page [1 B.8] [18.9] I find there is an overd express provision · .d ue payment would b in the credit contract that e charged to the 1st and 2nd Plaintiff account. I heed the lndo Zambia Bank 9~1 tnce of the Supreme Court in the case of where the Court fa d ~onard Mwelwa Witika and Others 1s1 should abide by ·t ce d ~1th an express provision held that parties it was wrong for the trial Judge to have disallowed it. an !he Defendant claims a sum of K48,000.00 as total expenses This IS expres~ly provided in clause 5 of the credit contract a~d is reflected 1n the status of the 1st Plaintiffs loan account appearing at page 2 of the Defendant's notice to admit documents. The same has not been disputed by any of the Plaintiffs. I therefore allow the sum of K48,000.00 as an expense. [18.1 OJ DW in his witness statement avers there was never an understanding between the parties that the failure to realise any rent or sell property was a condition for the repayment of the outstanding loan amounts. This was never challenged by the Plaintiffs. [18.11] DW laments that the 1st and 2nd Plaintiff failed to repay the loans for a period of 6 years resulting in the Defendant being unable to on-lend the same to deserving micro and small to medium enterprises. I accept this evidence as it is a notorious fact the Defendant is a financial institution. [18.12] For the above reasons, I enter Judgment in favour of the Defendant in the claimed sum of KB,543,087 .16 as at 16th February 2022. [18.13] The Defendant's counterclaim succeeds. [19.0] An Order for foreclosure or sell of the mortgaged leasehold properties to recover repayment of the outstanding loans together with the accrued interest and overdue payment thereof. J19 I Page [19.1] [19.2] [19.3] [19.4] [19.5] The Defendant claims mortgaged outstand· I easehold prop rt· payment thereof. an °rder for foreclosure or sell of the e ies to recover repayment of the mg oans together with the accrued interest and overdue The law on m t t . ° Counsel for the Defendant on the succinct submissions and or gages 1s well settled. In this regard, I am indebted ex T pos, ion on the law relating to mortgages. A mortgage is a conveyance of land as security for the payment of a debt as stated by Lord Lindley in the case of Santley v Wilde 16>. The mortgagee in a mortgage transaction takes title to the property as legal owner whereas the mortgagor becomes an equitable owner with a right of redemption. The right of redemption compels the mortgagee to re-convey title to the property back to the mortgagor upon the repayment of the loan in full. For some unknown reason, the Defendant did not produce the legal mortgages. However, the certificates of title to the mortgaged properties are all endorsed with a mortgage in favour of the Defendant (pages 27-37 Defendant's bundle of documents). I therefore accept and find legal mortgages were created. As to what remedies are available to a mortgagee, this was well expressed by the Supreme Court in the case of Reeves Malambo v Patco Agro Industries Limited (7l and reaffirmed by the Court of Appeal in the case of Cavmont Bank Limited v Cereal Millers and Farms Limited (a) and both cases are cited by Counsel for the Defendant. There is no doubt this Court has the jurisdiction to grant the reliefs sought by the Defendant. [19.6] I am unimpressed by the Plaintiffs argument that the loan amount was less than what was applied for hence the difficulty in paying back. I take issue with that as I find the 1st and 2nd Plaintiff signed the credit contracts and are legally bound by its terms. I heed the guidance of the Supreme Court in the case of Colgate Palmolive Zambia Inc v Abel Shemu Chika and 110 Others (9l where it held: J20 I P age . it "If there is one thin requires . g which more than another, public policy underst~ndin ts that men of full age and competent that th . g shall have the utmost liberty of contracts, and h e,r contracts when entered into freely and voluntarily ~ a~I be held sacred and shall be enforced by courts of Justice. " [ · 71 Propelled by the above passage which I adopt as my own, in the a?s~nce of any contrary evidence, the credit contracts are legally binding and it is apparent the 1st and 2nd Plaintiff are in default. [19.8] In respect to the 3rd Plaintiff, a collateral contract was executed where it made an undertaking or covenant to pay. Clause 1 states as follows: "The Owner of the collateral covenants that he/she will pay the bank on demand all moneys and discharge of all obligations and liabilities whether actual or contingent, due to the Bank at the date of this agreement or thereafter owing or incurred by the Bank by the borrower under the Credit Agreement when they are due, including all loans and advances from time to time made to the borrower under the credit agreement. .. " [19.9] Clause 2 of the collateral contract provides as follows: "In consideration of the Bank lending to the borrower or under ... in terms of the credit agreement, the Owner of the collateral provides and agrees to assign to the bank absolutely and with full title guarantee the following collateral (hereinafter referred to as the collateral assets) as continuing security for the payment and discharge of the Borrower's obligations under the credit agreement." [19.1 OJ The security is itemised in the collateral agreement and includes office furniture and the three mortgaged properties, namely Subdivision G of Subdivision D of Farm 411 a, Lusaka ( certificate No 24681 ); Subdivision K of Subdivision D of Farm 41 1 a, Lusaka (certificate No 24689); Subdivision H of Subdivision D of Farm 411 a, Lusaka ( certificate No 24683) and Subdivision E of J21 I Page ' Subdivision D of Farm 411 a, Lusaka ( certificate No 246781) registered to the 3rd Plaintiff. [19.11] On the construction of the cited clauses, it is apparent the 3 rd Plaintiff is liable to pay the Defendant in the event of default by the 1st Plaintiff. The 3rd Plaintiff is a trust and the mortgaged properties are registered in their name. the cumulative remedies of foreclosure, [19.12] There is a compelling case for concluding that the Defendant is taking entitled to possession and delivery of the mortgaged properties namely Subdivision G of Subdivision D of Farm 411 a, Lusaka (certificate No 24681 ); Subdivision K of Subdivision D of Farm 411 a, Lusaka (certificate No 24689); Subdivision H of Subdivision D of Farm 411 a, Lusaka (certificate No 24683) and Subdivision E of Subdivision D of Farm 411 a, Lusaka ( certificate No 246781) registered to the 3rd Plaintiff. My finding is supported by the evidence of OW and clause 8 of the credit contract which provides as follows: "This Agreement shall remain in force until complete fulfilment of the Borrower's obligations under the credit agreement. Once the Bank's records indicate that all of the Borrower's obligations have been duly fulfilled the Owner of the Collateral shall automatically be released from their obligations under this Agreement. " [19.13] A mortgagor is entitled to the right of redemption which is an equitable remedy. A foreclosure nisi is granted as the mortgagor has the opportunity to exercise the equity of redemption within sixty-five (65) days. After the period for redeeming the mortgage lapses, the foreclosure shall be absolute and the mortgagee shall be at liberty to exercise the power of sale without further recourse to this Court. The counterclaim succeeds. J22 I Page ' [20.0) An Order that a • receiver and manager of the mortgaged leasehold properties be appointed. [ 0. 1 l The Defendant seeks an Order that a receiver and manager of the mortgaged leasehold properties be appointed. [20.2] I note that the mortgage deeds were never produced in Court but only the certificates of title showing the endorsement of a third party mortgage to the Defendant. [20.3] I therefore decline to appoint any receiver and manager of the mortgaged leasehold properties. The counterclaim is without merit and fails. (21.0) An Order for damages for breach of the credit contract No CR- 01071000900-20 and credit contract NO Co-01071000924-45 executed between the Defendant and the Plaintiff. [21.1] The Defendant seeks damages for breach of the credit contract No CR-01071000900-20 and credit contract No. Co- 01071000924-45 executed between the Defendant and the Plaintiff. [21.2] A Plaintiff or Defendant (counterclaim) who brings an action for damages for breach, must prove the damages suffered. The proof is by way of cogent evidence. [21.3] I find that although the Plaintiffs breached the credit and collateral contracts between the parties herein, the proof of the damages suffered is lacking. I therefore award nominal damages of K10,000.00. [22.0] Interest on the sums found to be due [22.1] The Defendant counterclaims interest on the sums found to be due. In the case of BP Zambia Pie v Expendito Chipasha and 235 Others, it was observed that: "Our understanding of the law on the award of interest is that it is designed to compensate a Plaintiff for the period he has 123 I Page · th been kept out of the use of his money by a Defendant. This assum t' P ion is at the Defendant has been using that money, or at least is reasonably expected to have been doing so and deriving some benefit out of it while denying the Plaintiff the use of that money. It follows that once the money has been paid to the Plaintiff, there can be no basis for requiring the Defendant to pay interest on that money from the date it is paid to the Plaintiff.,, [22.2] I adopt the same rationale on awarding of interest. I award simple interest on the Judgment sum which shall accrue from date of writ until full payment. [23.0) Costs [23.1] The Defendant seeks costs for this counterclaim. It is trite law that costs are awarded at the discretion of the Court. As rightly stated by Counsel for the Defendant, in the case of Y. B and F transport v Supersonic Motors Limited l10l, the Supreme Court held as follows: "The general principle is that costs should follow the event, in other words, a successful party should normally not be deprived of his costs, unless the successful party did something wrong in the action or in the conduct of it." [23.2] Going by the cited authority, I see no reason not to award costs to Defendant, to be taxed in default of agreement. [24.0J Disposal [24.1] In view of the issues canvassed, and my findings including the conclusion reached above, on a balance of probabilities, I find the Defendant has proved its counterclaim. Consequently, I make the following Orders: 1. I grant an Order that the pt Plaintiff is in breach of the credit contract No CR-01071000900-20 and Credit Contract No CO- 01071000924-45 and enter Judgment in the claimed sum KB,543,087.16 of as at 16th February, 2022. J24 I Page ( 3 · T~e Judgment sum shall be paid within sixty-five (65) days of this Judgment. . A foreclosure nisi is granted and after the period for redeeming the mortgages lapses, the foreclosure shall be absolute and the Defendant shall take possession of the mortgaged properties being Subdivision G of Subdivision D of Farm 411 a Lusaka (certificate No 24681); Subdivision K of Subdivision D of Farm ' 411 a, Lusaka ( certificate No 24689); Subdivision H of Subdivision D of Farm 411 a, Lusaka (certificate No 24683) and Subdivision E of Subdivision D of Farm 411 a, Lusaka (certificate No 246781 ), registered in the 3rd Plaintiff, and exercise the power of sale without further recourse to this Court. 4. I decline to grant an Order that a receiver and manager of the mortgaged leasehold properties be appointed. 5. I award nominal damages for breach of the credit contract No CR-01071000900-20 and credit contract No Co-01071000924- 45 executed between the Defendant and the Plaintiff in the sum of K10,000.00. 6. Interest on the sums found to be due under (1) and (5) shall accrue at simple interest from date of writ until full payment. 7. Costs to the Defendant to be taxed in default of agreement. 8. Leave to appeal granted. Delivered under my hand at Lusaka this 29th day of June, 2023 ············ ~ ..... . IRENE ZEKO MBEWE HIGH COURT JUDGE J25 I Page