Mjoso v NBS Bank Limited (Commercial Cause 283 of 2016) [2023] MWHC 87 (27 September 2023)

REPUBLIC OF MALAWI IN THE HIGH COURT OF MALAWI COMMERCIAL DIVISION BLANTYRE REGISTRY COMMERCIAL CAUSE NUMBER 283 OF 2016 OLIVE MEJOSO CLAIMANT VERSUS NBS BANK LIMITED DEFENDANT CORAM: HON. JUSTICE J. ALIDE Mr. Banda, of counsel for the Claimant Mr. Kumwenda, Ms. Maona and Ms Makoko, of counsel for the Defendant Ms. M. Kachimanga, Court Clerk JUDGEMENT The Claimant commenced this action by way of summons issued by this Court on 2 August 2019. She claims various reliefs from this Court, including damages against the Defendant. The action emanates from the Defendant’s exercise of power of sale over the Claimant’s property Title Number Blantyre Central 650/17. I must mention though that this matter has had a troubled history. It was initially commenced in the High Court, Principal Registry, as a Land Cause No. 197 of 2016. By an order of the court on 16 November 2016, it was transferred to the Commercial Court. In the process, the matter has passed through three different legal houses and changed hands among different legal counsel. A lot of applications were filed and dealt with in the process. This includes an application and then a subsequent order granting permission to the Claimant to revive the matter on 12 June 2019. Somehow, the present summons was issued, and the matter was revived. The facts of the matter are that on, or about, 23 March 2011, the Claimant applied for a construction loan from the Defendant bank in the sum of K7,500,000. As security for the loan, she offered her property on plot number BC 1040/9, also known as tittle number Blantyre Central 650/17, situated in New Naperi Area in the City of Blantyre. On or about 15 July 2011, the Defendant wrote the Claimant offering her the loan at an interest of base rate of 17.5% plus 2.5%, adding to an effective interest rate of 20% per annum. The repayment term was pegged at 120 months. As part of the requirements, the loan attracted life and property insurance covers 1 in the sum of K6,000,000 and K24,400,000 respectively. The total monthly repayments for the loan, inclusive the life and property insurance covers repayments, was pegged at K207,612 per month. This was to be paid by the Claimant on linear method and was going to be reducing monthly for as long as the interest and repayment term remain unchanged. There were also administration and drawdown fees pegged at 1.5% and 0.5% respectively. These were payable once the loan was paid to the Claimant. On the security for the loan, the offer letter erroneously indicated that the loan was going to be secured by a first mortgage over the Claimant’s property title number Blantyre Central 680/17, instead of title number Blantyre Central 650/17. The Claimant accepted the terms and signed the offer letter on 21 July 2011. Further, the parties executed a Loan Agreement on 21 July 2011. By another offer letter dated 13 February 2012 from the Defendant, the Claimant, accepted an additional loan in the sum of K2,041,000 on 14 March 2011. The additional loan was consolidated with the first loan. According to the letter, the total loan exposure for the Claimant rose to K8,194,991. The repayment period was extended to 172 months. Further, the monthly instalment was adjusted to K231,945.74. This was to be paid on linear method and was going to be reduced on monthly basis as long as the interest rate remained unchanged. There were also administration and drawdown fees charged at 1.5% and 0.5% respectively. The Claimant also signed the corresponding Loan Agreement for the additional loan on the same day, 14 March 2012. The Claimant offered the same property title number Blantyre Central 650/17 as security for the additional loan. The offer letter, once again, erroneously stated that the additional loan was going to be secured by a charge on title number Blantyre Central 680/17. After obtaining the loans, the Claimant defaulted in the repayments. The Defendant proceeded and started taking steps to exercise its power of sale over property title number Blantyre Central 650/17. The property was advertised in the newspapers and bids from interested bidders were received. The Defendant then proceeded and exercised its power of sale. The property was offered and sold to one a Ms. Chatha, who also happened to be the Defendant bank’s employee. It was sold in the sum of K60,000,000, which was the highest bid. Following the defendant’s exercise of its power of sale, the Claimant brought up proceedings against the Defendant, in the High Court, Principal Registry, by Originating Summons as Land Cause No. 197 of 2016, challenging the manner in which the Defendant handled the Claimant’s loan account, and how the Defendant exercised its power of sale over the property. As noted in the foregoing, the matter was transferred to this court. After so many processes, the action was somehow recommenced in this court by way of summons. In the present action, the Claimant, among other things, contended that the Defendant did not have any power to sell the Claimant’s property because there was no charge in favour of the Defendant which gave them power of sale. She claimed that if the Defendant had such a charge then it was invalid as the same was registered long before she was offered the loan. She further argued that if the Defendant had the right to exercise the power of sale over the property, then the selling process was wrong, irregular, and invalid. She further argued that the sale of the property was to a person who had inside information and was not a bona fide purchaser for 2 value without notice. Further, she claimed the purchaser was in a fiduciary position to the Defendant and therefore not legally eligible to purchase the same. Overall, the Claimant argued that the power of sale had been exercised illegally in that the Defendant sold the property in bad faith and without a statutory notice which was in breach of the Registered Land Act. In respect of the loan itself, the Claimant argued that the interest rate charged by the Defendant was unjustifiable, unconscionably harsh, and illegal in terms of section 3 of the Loans Recovery Act. She further claimed that the penalty or default interest charged by the Defendant was illegal and was unilaterally applied by the Defendant without the Claimant’s concurrence. Further, the Claimant claimed that the Defendant’s calculations were fraught with accounting errors, and that the Defendant added debits to the Claimant’s loan account which were not agreed between the parties. The Claimant argued that the loan could not have fallen into arrears had the accounting been accurate. She claimed that the defendant breached the Consumer Protection Act in several areas in the manner it handled the Loan Agreement. The Claimant then prayed for several declarations and reliefs including that the whole sale transaction be reopened, that the property be transferred back to the Claimant; that the defendant pays damages for breach of contract, damages for trespass to property. The Claimant further sought any other order deemed to be fit by the court, and costs of the action. On the other hand, the Defendant submitted that it was a secured lender who had exercised its power of sale legally and procedurally under the Registered Land Act after the Claimant failed to honour her obligations in terms of repayment for the loans that she had obtained from the Defendant bank. The Defendant submitted that both loans were secured by a charge over title number Blantyre Central 650/17 (plot BC1040/9). The Defendant argued that it had the right to charge the applicable property, and then sold it upon issuance of the statutory notice in line with the terms of the Loan Agreement and the provisions of section 71 of the Registered Land Act. The Defendant argued that though the purchaser was its employee, she was not part of the process of the sale of the property and did not have any inside information as claimed by the Claimant. The Defendant argued that since there was never any illegality in the first place, there was no question about the purchaser buying the property with notice of some illegality. During the trial, the Claimant was her own witness. She filed a witness statement, and a supplementary witness statement. Both statements, and the exhibits thereof, were adopted as part of her evidence. In addition to herself, the Claimant called one other witness, a Mr. Augustine Mumba, a Financial Consultant. He also filed a witness statement which included some exhibits. Both were adopted as part of his evidence. The Defendant on the other hand had three witnesses, but only called two, Mr. Madalitso Phiri, the Defendant’s Assistant Legal Recoveries Manager; and Mr. Viwemi Mzumara, the Defendant’s Recoveries Manager. Both filed witness statements, and exhibits thereof, which were adopted as part of their evidence. The third witness, Ms. Chatha was not available despite having filed her witness statement and exhibits. Looking at the Claimant’s Statement of Case and the submissions presented in court, the main issues that this court ought to determine are: (a) Whether the Defendant had a valid charge on property title number Blantyre Central 650/17; (b) If the finding in 1 above is in the affirmative, whether the Defendant exercised its power of sale in contravention of section 71 of the Registered Land Act; (c) Whether the interest charged on the Claimant’s loan was excessive, unreasonable, and unconscionable in terms of section 3 of the Loans Recovery Act; (d) Whether the penalty interest charged to the loan account was illegal on account that it did not represent a genuine pre-estimate of loss in the event of default; (¢) Whether the loan interest calculations where fraught with accounting errors; (f) Whether the Defendant added debits which were not agreed between the parties; and (g) Whether the purchaser of the property was in fiduciary position to the Claimant and not legally qualified to purchase the house. It was the Claimant’s testimony that she obtained two loans from the Defendant, the first in the sum of K7,500,000, and the additional one in the sum of K2,041,000 to help her complete her house in Naperi in Blantyre. Both loans were to be secured by her property on title number Blantyre Central 250/17. She confirmed having accepted loan offers and signed the Loan Agreements for the two loans and also having presented title documents for her property forming the security for the loans. She also confirmed that offer letter erroneously indicated the title number for her property as Blantyre Central 680/17 instead of Blantyre Central 650/17. The Claimant submitted that the property that she had handed over as security i.e., Blantyre Central 650/17 was never charged because the Defendant registered security on title number Blantyre Central 680/17. She submitted that the Defendant’s statutory notice of sale that was served on her did not indicate the title number of the property that was earmarked for the sale between title number Blantyre Central 650/17 and Blantyre Central 680/17. She argued that this meant that there was no statutory notice at all. She submitted that upon being served with the statutory notice, she instructed her lawyers to go and place a caution on title number Blantyre Central 680/17. However, they failed to do so because the said property was non- existent. She accused the Defendant of having misled her into signing security documents containing a defective title number so that she should not be able to place a caution on the property which led to the Defendant to easily transfer the same to the purchaser. In her testimony, the Claimant accused the Defendant for having acted in bad faith in the implementation of the Loan Agreement which frustrated her efforts in settlement of the loan. She accused the Defendant for unilaterally having raised the interest for her loans thereby raising the repayment instalments making it so difficult for her to meet the repayments. She detailed the payments that she had made in respect of the loans and in total, she claimed that she had paid the sum of K 19,338,630 in four years on a loan repayable in 14 years. This meant that she was paying an average monthly payment of K402,888, against the agreed sum of K231,945.74. The Claimant submitted that she had asked for the restructuring of the loan, but it was declined. She claimed that at the time of the sale of her property, she had paid a total of K19,338,630, and the outstanding balance was K24,375,306. The Claimant further stated that the Defendant had breached their fiduciary duties to her in that the restructuring of the loan was possible but that, in her case, the Defendant was simply bent on selling her property. She claimed that despite so much effort she put to pay back the money, the Defendant deliberately frustrated her efforts. She claimed that this was done to have the Defendant bank’s employees purchase her property. To buttress the same, she submitted that two of the Defendant’s employees, Mr. Andrew Kambalame, and Ms. Susan Chatha, were among the people who submitted their bids for the property. The Claimant testified that in early November 2016, before the Defendant advertised her property in the papers, a Mr. Frederick Nyirenda, her agent, introduced her to Ms. Chatha who had expressed the interest to buy the property. She stated that they had discussions inspected her property. She claimed that Ms. Chatha apparently told her that her budget was K70,000,000. On the strength of that, the Claimant advised the Defendant that she was going to pay K7,000,000 within the month of December but that the Defendant declined the same and proceeded to offer the said Ms. Chatha the property at K60,000,000. The Claimant submitted that the Defendant as her banker acted in bad faith and in breach of its fiduciary duties by acting as an agent of Ms. Chatha. She accused the bank of sharing confidential information on the communication between the Claimant and the Defendant’s Loans Recoveries Officer on the property sale proposal of K60,000,000 which was the amount that the said Ms. Chatha submitted as her bid. The Claimant further testified that the Defendant undervalued her property for the purposes of meeting the economic interest of its employee Ms. Chatha. She submitted that she engaged her own valuers who valued the property at K86,000,000 against the valuation that was done by the Defendant’s valuer which pegged the same at K54,200,000. The Claimant stated that at all material times, the purchaser of her property, the said Ms. Chatha was aware of the defect in the Defendant’s charge over her property Blantyre Central 650/17 and had notice of the illegal exercise of power of sale of the property by the Defendant. The Claimant argued that she did not consent to Ms. Chatha’s purchase of the property and claimed that the Defendant had no power to sale the property because it was not charged. She then argued that if the Defendant had the power to sale her property, then the said power of sale had been exercised in bad faith. The Claimant stated that she had requested the Defendant to provide her with minutes relating to the sale of her property to the successful bidder as agreed by the parties. Initially, the Defendant claimed to have attached the minutes in a letter that was sent to her lawyers which they did not. In their subsequent letter, after being queried, the Defendant advised that the requested minutes did not exist. In cross examination, the Claimant confirmed that she signed two loan agreements with the Defendant and that the security for both loans was her property on plot number BC1040/09 also known as title number Blantyre Central 650/17. She also confirmed that the documents that she presented to the Defendant related to her property on title number Blantyre Central 650/17. She confirmed that she was aware that her property was subject to be sold upon default. She also acknowledged having been in default on the loan repayments for extended periods, and confirmed that when she made those repayments, they were sporadic. She further confirmed that at some point she agreed that her property be sold. She further confirmed having engaged an estate agent at some point to have the house sold and argued that this was in desperation. The Claimant further confirmed that the original lease that she had brought to the bank as title deed had the year 2010 on it but was cancelled and was replaced by 201 1 in ink. She further conceded that it was indeed possible to have an error on a document and then be corrected. In re-examination she stated that in her conversation with the Defendant’s employee, Mr. Madalitso Phiri, in respect of her proposal to restructure the loan for 30 months, she was advised that the 30 months restructuring of the loan was not possible and that the Defendant would only accept the 14 months. So, she conditionally accepted the 14 months restructuring through an email stating that the 14 months restructuring was acceptable provided the bank allowed her to pay K600,000 a month in the interim to cover the interest, and then capital payment to be paid a bullet payment anytime within the 14 months period to clear the loan which the Defendant refused. On the one who purchased her property, the Claimant confirmed that she knew Ms. Chatha through an estate agent that she had contracted to look for buyers of the property and that they had engaged each other several times before the property was sold by the Defendant. She confirmed having met her and went together to see the house, and after viewing the house she allegedly made an offer of K 70,000,000. She apparently refused the offer because the Claimant was looking for K80,000,000. The Claimant also confirmed having told Ms. Chatha that she was selling the house because she had issues with the bank. The Claimant’s second witness was Mr. Augustine Mumba. He testified that he had 25 years’ experience in the banking sector, and now a Banking Consultant for 11 years. He submitted that he had been hired by the Claimant to review her mortgage account with the Defendant; to provide the Claimant with professional advice on how her loan account should have been managed by the Defendant; to advise the Claimant on banking guidelines set for the by the Reserve Bank of Malawi on the management of credit risk for financial instruments when a lending institution expects to incur a credit loss; to reconcile the charges levied by the defendant on the Claimant’s loan account; and to advise the Claimant when she had sought to negotiate with the Defendant on matters affecting her loan account. It was his testimony in summary that the bank started with an error in terms of computation of the Claimant’s monthly payments on the loan because the Defendant had brought in other variables into the repayments such as life insurance and property insurance. He submitted that the loan repayments should have been restricted to the loan plus the interest. He observed that bringing in many variables created an administrative challenge to the management of the loan. He further stated that the Defendant should have asked the Claimant to pay the bank charges in cash instead of debiting the loan account. He observed that the Defendant had worked out fixed monthly repayment of the instalment of K207,612 determined on linear method being repayment of the principal debt and finance charges. He stated that he did not know the basis for the said monthly repayment. He argued that for a loan in the sum of K7,500,000, plus administration fees at 1.5% of the loan amount, and disbursement fee of 0.5% of the loan amount, which was going to be K112,500 and K37,500 respectively was going to bring the total to loan K7,650,000. And the said amount was to be charged interest at 2.5% above the Defendant’s base lending interest of 17.5%, making it 20%, for 120 months. He argued that the deductions were not going to be K207,612. He stated that the monthly deduction of K207,612 were for the sum of K10,742,867.03. To that effect he attached an amortisation schedule confirming that monthly loan deductions at linear methods for 120 months was applicable to a loan of K10,742,867 and not the sum of K7,650,000 of the loan amount inclusive of administration and disbursement fees. To this effect he submitted that it was not clear how the bank expected that the sum of K7,650,000 was going to grow to K10,742,857,03. He exhibited these calculations in ASM 2(a) and (b). So, in his view the deductions were excessive. It was his evidence that the Defendant charged the Claimant wrong commissions. He observed that the Claimant started drawing down on the loan on 9 August 2011. However, it was noted that initial amounts of K62,200 had been wrongly debited to the loan in respect of processing and draw down amounts. On 15 August 2011, fees in the sum of K1,000 and K50.00 we also wrongly debited. On 18 August 2011, a second draw down of K3,750,000 was made and wrong commission had been debited on the account. He observed that processing fees at 1.5% and draw down fees at 0.5% amounted to a total of K75,000. In this regard the Defendant debited the sum of K75,000 correctly but duplicated the same by debiting the account K18,750 draw down fees again. It was his evidence that the above trend continued, and the said duplication was repeated on September 7, 201 1, and October 11, 2011, when K1,600,000 and K1,975,475 were drawn down. Their respective draw down fees of K8000 and K9,877.49 which was already included in K32,000 and K3 9,509.49 respectively were debited again. It was his evidence that adjusting all the errors showed that the Claimant was overcharged K56,747.82 was overcharged as wrong commission charges. On the additional loan, it was his evidence that the Claimant got an additional loan in which she accessed the sum of K2,041,000. The total amount of the whole loan was stated to be K8,194,991. He stated that it was not clear how the total amount of K8,194,991 was arrived at. He further submitted in his evidence that the Defendant advised the Claimant in the additional loan that her loan was supposed to be charged interest at the defendants’ base lending rate which was at 17.5%. With the same, it was determined that that the fixed monthly repayment instalment of K231,945.74 over 172 months using linear method should have been K14,586,468.93. It was submitted in evidence that the reason why the repayment instalment of K231,945.74 to clear the sum of K14,5 86,468 was not entirely demonstrable. To that effect an amortisation schedule showing that the sum of K231,945.74 over 172 months was going to result in K14,586,468.93 was exhibited as ASM6. On interest he testified that there were certain debits on the Claimants account fashioned “Mortgage Account Transfers” that he argued were not authorised or agreed upon by the Claimant. He stated that these were supposed to be justified by the Defendant before being debited from the Claimant’s account. According to the witness these accumulated to K2,022,176.45. He further questioned the increase in the insurance premiums which were at K13,190 in July 2011, but rose to K965,097.55 in October 2015. The witness then stated what his expectations were in terms of how the Defendant should have handled the loan. Among others he stated that the Defendant should have left the Claimant service her loan for the remaining period of 112 or 113 months. He stated that it was harsh, predatory, punitive, and unconscionable for the Defendant to have foreclosed on the loan when the Claimant had demonstrated that she had capacity to repay the loan. He submitted that the Defendant needed to consider the proposals on how the loan was to be repaid going forward given that interest rates had been increasing as high as 40% on several occasions. The witness further stated that the loan agreement letters did not mention that the loan account was going to be subject to penalty or default interest and argued that there was no business or commercial justification for the Defendant to charge default interest or penalty interest rates on the Claimant’s loan. He testified that section 28(i) of the Consumer Protection Act states that interest must be charged at affordable rates or lowest possible rates. He submitted that charging default interest rates over the agreed rates went against the provision of the Act. He emphasized that the fortunately the agreement between the parties did not spell out that default or penalty interest was chargeable under the arrangement. He further stated that the bank was not supposed to charge interest when the loan was in the moratorium period of six months because there was compounding effect in the subsequent months. In conclusion he testified that the defendant had no commercial justification or business justification for the action they took in selling the house more so when the Claimant demonstrated capacity to pay the loan instalments arrears by paying a total of K19,338,630 bringing the balance of the loan below the expected balance of K10,422,211.80 Dr. He submitted that the Defendant was not able to allow the Claimant to enter a negotiated and fresh loan repayment program because it was making too many accounting and loan administrative errors which had been mentioned in part above. He argued that in the premises, the overcharged interest in the sum of K14,181,235.56 and the duplicated commission of K 57,747.82 on the Claimant’s loan account were unfair, unconscionable, and harsh to the Claimant. He further stated that he believed that the Defendant had no power to sell the Claimant’s property as they had not charged it, and that if they had such power, they exercised it in bad faith. In cross examination, Mr. Mumba acknowledged that the Claimant defaulted on her loan obligations for long periods of time. He confirmed that the Claimant did not make any payments towards the loan the whole of 2013, and that in 2014 she made no payments from 31 July 2014 all the way to 30 May 2015. Further he agreed that the linear method of payment of a loan allowed changes in interest. Upon being showed clause 4 on Additional Finance Charges, Mr. Mumba acknowledged that the parties did agree on additional charges like OO finance charges and default or penalty interest. He further submitted that he did not have any evidence to suggest that the Defendant had flouted or was flouting banking regulations put in place by the regulator. When asked as to what interest rates the Claimant should have been charged in the circumstances, and what affordable or lowest possible interest rates that the Defendant should have charged the Claimant, Mr. Mumba submitted that it was outside his area of expertise to determine what affordable or lowest possible interest rates were. He further admitted that when one gets a bank loan, the bank insures that loan. Consequently, there is the component of insurance charged to the account which must be recovered. Upon being queried on some miscalculations in his figures, Mr. Mumba confirmed having made a mistake in his calculation of the drawdown fees on 9 August 2011 as provided in his witness statement, under paragraph 14(1). He admitted having made an error and stated that the figure should have been K52,000. In that regard, he was queried on how the court can trust him when he was making mistakes on very simple calculations in his submission, but he insisted that he was a credible witness in the matter. In re-examination, he submitted that the linear method of determining an instalment allowed changes because of interest but it is to be the same over time. He observed that the arithmetical errors that he made on the adding up of the figures in respect of the drawdowns for 9 August 2011 had no impact on the matter. Mr. Mumba’s evidence marked the closure of the Claimant’s case. In respect of the defence’s case, the first witness to be called was Mr. Madalitso Phiri, the Defendant’s Assistant Legal Recoveries Manager. He testified that his duty at the Defendant’s bank was to receive instructions from the Business Department on loans that had gone bad and to proceed to make recoveries on those loans based on the security provided. It was his evidence that such matters would be referred to him only after the Business Department had engaged with a client, with a view of regularising the bad loans, and had failed in that regard. He stated that the Business Department would engage with a client in that fashion, and upon failure, issue a 90-day statutory notice of sale to them. It is after the expiry of 90 days, that the matter is referred to him for action. It was his evidence that the decision to sell the Claimant’s house was reached after numerous engagements with the Claimant. These engagements were aimed at ensuring that the Claimant made repayments on her account so that the deteriorating loan situation did not escalate. This however did not help as the loan situation went very bad. He stated that at some point during the engagements, the Claimant did request that her loan be restructured. The Defendant provided her with two sample calculations restructuring her loan for 30 and 14 months respectively. Of the two, the Defendant advised the Claimant that the bank was open to accepting the 14 months restructuring of her loan. The Claimant accepted the proposal but with a condition that she be allowed to pay K600,000 monthly to cover the interest portion and that the capital be paid by one bullet payment at any time within the 14 months. It was his submission that the Claimant’s counter proposal was rejected by the Defendant. It was his evidence that following the Defendant’s response to the Claimant declining her counter proposal, she responded by indicating that the Defendant was at liberty to proceed and sell the property at a price above K60,000,000. It was his evidence that during the time the discussions were going on with the Claimant, the Defendant had engaged a registered valuer and had valued the property in the sum of K54,200,000, with a forced sale value of K45,000,000. It was his further evidence that after the property had been advertised, the Defendant received several bids. As per practice at the Defendant bank, a team from the department was constituted and conducted the opening and evaluation of the bids. He submitted that it was at this point that he became aware of Ms. Chatha’s interest in the property as she had submitted a bid as well. Her bid was for K60,000,000, and was the highest among the bids. Accordingly, a memorandum was deployed to the responsible officer with the results of the evaluation, and seeking an approval to proceed and offer her the property which was granted. It was his testimony that since the Defendant had exercised its power of sale, they did not need any consent from the Claimant to proceed and offer the property to Ms. Chatha. It was his evidence that the computation presented by the Claimant’s second witness were not correct as they were just assumptions which were not within the terms of the Loan Agreement. In respect of the Claimant’s loan, Mr. Phiri confirmed that the first loan was indeed subject to interest at the time she was accessing it at the base lending rate of 17.5% plus 2.5%. He submitted that the base lending rate was not static because it was based on the policy rate set by the Reserve Bank of Malawi. So, each time the policy rate moved, the bank’s base lending rate was also moving in the corresponding direction which inevitably affected the monthly instalments. As such the monthly instalments could not be fixed for the whole period as proposed by the Claimant’s witness since interest rates were fluctuating. He further explained that apart from the normal interest, the loan was also subject to finance charges which included default or penalty interest as agreed in the Loan Agreement. Accordingly, he submitted that Claimant’s witness’s arguments that the instalments should have been fixed for the whole period, and that the interest rates were unconscionable, excessive, and extortionate were based on wrong assumptions. He submitted that the Claimant’s second witness’s calculations had so many errors one of which he specifically admitted. He stated that for example the calculations he was using in trying to compute the monthly repayments did not factor any interest. He further submitted that the calculations also ignored the inconsistencies in the loan repayments by the Claimant. For example, after the Claimant made the first drawn down, she never made any payment following month, November 2011 as per the Loan Agreement, and went all the way to February 2012 where she made her first payment. He then stated that from February 2012, the Claimant went all the way to July 2012 for her next payment. And in 2013, the Claimant went the whole year without making any single payment. It was his testimony that the Claimant’s default in the payments had an impact on the figures in the loan account. He argued that the Claimant’s witness did not take those into account. As a result, he proceeded on wrong assumptions hence the wrong calculations and doubtful figures that he had presented. 10 On the payment of other charges such processing fees, draw down fees, legal fees, and others, the defence witness stated that the agreement provided that the Claimant could pay the same directly, or they could be debited to the account. Despite been given a chance to pay the same, the Claimant never did so. Accordingly, these were debited to the loan account and became part of the deductions in the loan account. It was submitted that amounts came after the Loan Agreement has been signed. Inevitably, they increased the Claimant’s exposure on the account. In cross examination, the witness was asked at length regarding why the account started running from 2009. He explained that a loan account for any client is opened on the date of obtaining a loan. He conceded that the statement that had been presented in court showed January 2009 as the opening date of the statement and not 2011. He however stated that he had an explanation which he needed to verify. On the loan statement presented in court he maintained that the same was a correct one. He maintained that there was nothing wrong with that. He explained that the Mortgage Account Transfers that the consultant had taken as wrong deductions were draw down fees, insurance, _and legal fees. On the figure of K3,750,000 drawn on 18 August 2011, he explained that it was a drawn down and there were no legal fees, or insurance added. He further explained that amounts debited on 26 September 2011 were legal fees that were debited to the account when they Defendant was creating a further charge on the property. The figure on 22 August 2014 was insurance, and the one on 21 March 2103, the witness stated that there was need for him to verify for him not to provide a speculative response. On the figure of K872.63 debited on 9 August 2011, termed as draw down fees, the witness was asked if the Claimant drew down any amount on the said date. The response was that she did not draw any money on that date but would be able to explain. In re-examination, Mr. Phiri started by explaining that the sum of K872.63 that was debited on the claimant’s account of 9 August 2011 was a drawdown fees which came from the funds that had been paid by the Defendant on behalf of the claimant. He confirmed that there were sums paid on account of the Claimant in the sum of K2,000 for bank cheque that was issued for the Claimant; K5,000 consent fees paid on behalf of the Claimant; K 45,200 stamp duty paid to Malawi Government on behalf of the Claimant, and the sum of K122,325 professional legal fees paid to lawyers on behalf of the Claimant since she had no funds to pay upfront. All the payment under that head came up to K174,525 and if that is to be multiplied with drawdown foes charge of 0.5%, it was going to come to K872.63, as drawdown fees. In respect of why the statement started with the year 2009, the witness clarified that indeed when a client accesses a new loan, a loan account is created for the customer. In this case the Claimant’s account was opened in 2011. However, when he was extracting the statement of the loan account, he commanded the system to produce a statement from 2009. This was the time that the Defendant started using the accounting system that they were using then before the current one that started in 2016. He stated that the idea was that the system should capture every transaction that happened on this account. That is why the system showed the entry of a figure 0 (zero) from 2009 up to 2011 prior to the Claimant obtaining of the loan. On Mortgage Account Transfers, the witness explained that this was a generic code that is used when the one processing a transaction in the system does not find the specific code to name the particular transaction. In that situation they would simply use the generic code, Mortgage Account Transfers. He explained however that the system does provide the specific details of what exactly the transaction was if one went into detail within the system. He stated that for example, on 18 August 2011, there was the sum of K3,750,000 that was payment made to the Claimant, and on the same date there was the sum of K38,351.80 as Mortgage Account Transfers, which was insurance payment made on behalf of the Claimant. On why he had brought no alternative calculations opposing those brought by the consultant, he explained that there was no need for him to do so in addition to the loan statement that had already been tendered. He submitted that the statement that he had produced in court represented the true reflection of the actual transactions on the loan account. On the allegation that the Claimant’s loan statement had errors, he stated that the Claimant’s loan statement originated directly from the bank system and there was no figure that was simply thrown in there. He further stated that there was no figure that he can fail to explain. He stressed that there were no errors on the statement at all. He maintained that the statement contained a true reflection of the entries on the Claimants loan account and again faulted the consultant’s calculations as they were based on wrong assumptions. On why the Defendant was charging interest during the moratorium period as queried by the Claimant’s witness, the consultant, he explained that the interest was charged in respect of the financial commitments that the Claimant was supposed to pay to the Defendant in advance as per the Loan Agreement which she did not. These were charges like stamp duty, legal fees, professional fees, processing fees, drawdown fees which the Claimant was supposed to pay these in advance but did not. It was submitted that the Defendant paid the same on her behalf and then debited her loan account. These debits were not part of the amounts covered by the moratorium on the interest. They were supposed to be paid in advance by the client before accessing the funds. He explained that interest that was charged on the statement on 31 August 2011, 30 September 2011, and 31 October 2011 was in respect of the amounts that were debited to her account as an advance. He submitted that this interest was not covered by the clause in the Loan Agreement since the said clause was only applicable in respect of moratorium of interest for the actual loan amount. Mr. Phiri closed his testimony at this point. The Defendant’s second witness was Mr. Viwemi Benson Mzumara, the Defendant’s Recoveries Manager. It was his testimony that the Claimant accessed two loans with the Defendant bank in the sum of K7,500,000 and K2,041,000, and executed two loan agreements respectively. It was his evidence that both loans were secured by property sitting on plot number BC 1040/9, being title number Blantyre Central 650/17. The property was under lease from Malawi Housing Corporation (MHC). me 1) He submitted that due to the error that was made in the letter of offer and Loan Agreement, the security documents erroneously indicated the property to be secured was title number Blantyre Central 680/17. It was only when the Defendant proceeded to seek consent from MHC that they were advised that the said title number did not exist in their records. It was at this point that the Defendant learned that there was no property titled number Blantyre Central 680/17. It was at this point that MHC proceeded and issued the Defendant with the licence and consent for property on title number Blantyre Central 650/17, which was the same as plot number BC1040/9. He testified that all along, the Claimant had indeed indicated that her intention was to secure property on title number Blantyre Central 650/17 and not Blantyre Central 680/17. It was his evidence that when they presented the finalised charge at the Blantyre Land Registry for registration, the Registrar of Lands struck off the title number 680/17 on the cover page and replaced it with title number 650/17 in ink. It was his evidence that after the charge was registered, a copy of the same was surrendered to the Claimant clearly reflecting the correction made by the Registrar. The Claimant did not raise any issue with the correction. He submitted that in as far as security for the loan was concerned, the Loan Agreement expressly stated that the same was going to be granted on condition that security was to be furnished by the Claimant. That security was property on plot number 1040/90, which is property on title number Blantyre Central 650/17. It was his testimony that the Defendant was not going to advance the Claimant a loan without such security. On the applicable interest rates for the loan, Mr. Mzumara testified that the Claimant exactly knew what rates were applicable in respect of the loan and what would happen to them if she defaulted. He submitted that it was unfortunate that the Claimant, after obtaining the loan and defaulting in the payments, was turning around, claiming that she was a necessitous person when it came to the repayments. On statutory notice, he submitted that the Defendant duly communicated to the Claimant about the planned sale. He exhibited a copy of a letter “VBM5” which was written by the Defendant to the Claimant on 8 April 2015 notifying her about the state of her loan account and asking her to regularise the same withing 90 days. She was further informed about the Defendant’s planned sale of her property if she failed to settle the debt in 90 days. In cross examination, Mr. Mzumara admitted that the charge over the Claimant's property was dated 24t* March 2011, earlier than the date on which the loan was offered. He further confirmed that that there was no other charge apart from the one that had been exhibited. He stated that it was, in his view, proper for the bank to exercise the power of sale based on the charge because it continued to be security in respect of the Claimants other borrowing from the bank. He further confirmed that the statutory notice did not refer to any title number. On the charge, Mr. Mzumara confirmed that the Registrar had just rectified the front cover page of the charge. On why he did not exhibit the entire document, he stated that in his view, a charge is not only one page but the entire set of documents from the front page to the last page. He stated that there was no need for him to exhibit the entire document because the rectification that was the subject of the court’s contention was only in respect of the cover page. Qo He submitted that the error that the Registrar had corrected was just a cancellation of the figure 680 and replacing it with 650 in ink just as he did on the Claimant’s title deeds that she surrendered to the Defendant. On the purchaser of the property, Mr. Mzumara confirmed that the property was sold to Ms. Chatha who was then the Defendant’s employee in the sum of K60,000,000. He stated that she bought the property because she was the highest bidder. He submitted that he did not know whether Ms. Chatha had access to the Claimant’s loan account. When asked whether the bank records all its discussions in form of minutes, he submitted that not all discussions in the bank are reduced to minutes. On whether Ms. Chatha was part of the team that did the evaluation of the bids for the property, he submitted that she was not part of the team that was involved in processing the sale of the property. He confirmed that he had not brought any evidence to show that Ms. Chatha did not participate in the process leading to the award of who purchased the property. When asked to confirm that Ms. Chatha bought the house at K60,000,000 which was the same as the email that the Claimant wrote to the Defendant advising the Defendant that she can accept such sum, and that she had bid at the same amount because she had inside information, the witness submitted that the email from the Claimant to the Defendant stated that the Claimant was going to accept to let the property go at a price “above K60,000,000”. He stated that the bid that was submitted by Ms. Chatha was at K60,000,000. In his view, above K60,000,000 meant more than K60,000,000. The witness therefore did not agree that the bid submitted by Ms. Chatha was the same as that demanded by the Claimant, and further did not agree that the said Ms. Chatha used her inside information in her bid. Asked as to whether he knew that at the time that she bought the property she paid K14,000,000 Mr Mzumara confirmed same. He went on to state that he was however not aware of how she secured the alleged loan from the bank for the balance of the purchase price because he deals with bad loans and not new ones. On whether he was aware that one of the allegations from the Claimant was that Ms. Chatha knew about the illegality in respect of the sale of the property and she participated in it, he denied having been aware of the same. In re-examination, he explained that it was uncommon for some of the bank’s customers to be offered a loan after a charge had already created because some clients come for multiple loans. He submitted that the practice is to allow these multiple borrowers to use an existing charge for a previous loan as security for subsequent borrowing. He further explained that the rectification of the error on the title number for the property subject of the Claimant’s loan was made at the time that the documents were presented for registration. The Blantyre Land Registry confirmed that there was no property titled number Blantyre Central 680/17, and that Blantyre Central 650/17 was the right title number for the property in question. He submitted that it was at this point the Land Registrar cancelled out the 680 and replaced it with 650. He then confirmed that the wrong the title number originated from the typographical error in the Claimant’s credit file. Ds On the sale of the property, he stated that the Defendant proceeded to exercise of its power of sale when it became very clear that the Claimant had defaulted on the loan repayments. He submitted that the Defendant followed the process as required by the law. A statutory notice was duly sent to the Claimant and the property was valued and then advertised. He submitted that when bids for property were received, they were kept by a Head of Department until the date of opening. On the bid opening day, the bids are processed by a team of 5 officers who took note of the highest bidder, and then a memo was sent to an authorising officer who gave an approval to proceed and offer the property to the successful bidder, Ms. Chatha. He submitted that the said Ms. Chatha was an employee of the Defendant bank and had a prior engagement with the Claimant. He denied that Ms. Chatha was involved in the process of opening the bids or any process on the sale of the property. On the difference between the instalments in the application form and the final instalments in the loan offer and then the loan agreement, Mr. Mzumara explained that at the loan proposition stage, the customer proposes an amount that they will be able to pay. However, after the bank does the amortisation of the loan and factors in interest and repayment time etc, it issues a conditional offer to the customer. Once the customer signs the offer, a formal loan agreement is prepared and executed by the customer before disbursement of the loan. The customer will have agreed with the instalments at this point. This marked the end of the testimony for the Defendant’s second witness. At this point, the Defendant informed the court that it had concluded its evidence because the third witness, Ms. Chatha, was not available. Counsel informed the court that the said Ms. Chatha had left the employment of the bank and since then did not come each time she is called to court to give evidence, hence not available. In that regard, it was submitted that the Defendant was going to do with the two witnesses that had already testified. This marked the closure of the defendant’s case, and the hearing of the matter. I must begin by stating that, this being a civil matter, the burden of proof lies with the party who alleges a particular fact i.e., he who alleges or asserts a matter of fact must prove it. In the present case, it is the Claimant who has the task of proving whatever the allegations she has levelled against the Defendant. It is trite that the standard of proof required in the circumstances ;s one on a balance of probabilities. Denning J, as then he was in Miller v. Ministry of Pensions [1947] 2 All ER 372 stated as follows: “That degree is well settled. It must carry a reasonable degree of probability, not so high as is required in criminal cases. If the evidence is such that a tribunal can say ‘we think it is more probable than not’ the burden is discharged, but if the probabilities are equal, it is not.” This position has been affirmed in several cases including Kentam Products v Kenneth Mweso, Civil Cause No. 68 of 2013, High Court, Mzuzu District Registry (unreported) in which Justice Madise, as then he was, stated as follows: “The burden and standard of proof in civil matters is this: He/she who alleges must prove and the standard required by the civil law is on a balance of probabilities. The principal is that he who invokes the aid of the law should be first to prove his case as in the nature of things, a negative is more difficult to establish than a positive. Where at the end of the trial the probabilities are evenly balanced, then the party bearing the burden of proof has failed to discharge his duty. Whichever story is more probable than NOT must carry the day.” In his submissions, counsel for the Claimant first dealt with the Defendants failure to call the third witness in the matter, Ms. Chatha. He argued that failure by a party to call a key witness worked against the party who would have called the witness. It was submitted that the assumption is usually that such a party fails to call such a witness because of fear that they may tender adverse evidence against them. The Claimant argued that the failure by the Defendant to call Ms. Chatha as a witness was because she would have said things adverse to the Defendant’s case. The Claimant submitted that Ms. Chatha would have conceded that she participated in the discussions leading to the purchase of the property, and that she knew the illegalities involved in the Claimant’s loan account. The Claimant argued that the Defendant did not want the court to know these matters and called upon the court to dismiss the Defendant’s case outright. On the other hand, the Defendant submitted that Ms. Chatha was not a key witness in the matter. The Defendant argued that they had decided to call her simply to corroborate the bank’s position that the Claimant and Ms. Chatha knew each other, and that they had met in the company of the estate agent that she had contracted to look for potential purchasers of her property. They even went to see the property together prior to the Defendant exercising its power of sale. The Defendant submitted that since the Claimant admitted in cross examination to have interacted with the said Ms. Chatha in the company of the Claimant’s estate agent, and that they had visited the property together, and further that since Ms. Chatha was not forthcoming to testify after being called several times, they thought it wiser to do with the two witnesses because the issue that she was mainly coming to testify on had been admitted in cross examination. The Defendant submitted that it was going to be otiose to have her testimony when it was clear that it was already corroborated by the Claimant in cross examination. Having considered arguments from both parties on this issue, it is indeed settled that failure by a party to call a key witness is frowned upon by the courts. The assumption is that the party who fails to call such a witness is hiding some deficiency in its case which would otherwise be exposed by the other party if the witness is called to testify. It is, however, established in this regard that this assumption does not apply in the case of every witness. It only applies to a key witness. In Mpungulira Trading v. Marketing Services Division [1993] 16 (1) MLR 346, Mwaungulu, J, as he was then stated that the failure by a party to call a crucial and material witness works against a party who would have called such a witness. The key words are “a crucial and material witness”, not any other witness. That is why it is not strange to find that during trial parties do, sometimes, withdraw witnesses as applicable. Having regard to the present matter, Lam of the view that Ms. Chatha was not a key and crucial witness in this matter to deserve the dismissal of the Defendant’s case. The Claimant’s submission as regards what Ms. Chatha was going to admit during trial was nothing but mere conjecture. Indeed, for the Claimant to argue that Ms. Chatha was going to admit that she was part of the evaluation process for the sale of the property, and that she was going to concede in cross examination that she knew the illegalities perpetrated on the on the Claimant’s loan account by the Defendant is simply speculation. To my mind, the Claimant is simply trying to take advantage of the Defendant's predicament and find room to manoeuvre from her responsibility of discharging the burden of proof required of her. It must be emphasised that the burden lies on the Claimant to prove the set of facts that she is bringing and not to simply speculate on the same. Lam firm on my view that Ms. Chatha is not a crucial and material witness looking at the issues in contention in this matter. I therefore dismiss the Claimant’s submission and proceed to the substantive issues. On whether there was a charge on property title number Blantyre Central 650/17, the Claimant’s contention is that there was no charge on the property title number Blantyre Central 650/17 because the charge that the Defendant prepared and registered was in respect of title number Blantyre Central 680/17. The Claimant argues that if by any chance there was a charge on title number Blantyre Central 650/17, then that charge was not valid in respect of the Claimant’s loan twofold, first that the charge was registered long before the loan was advanced to the Claimant, therefore not applicable to the present loan; and secondly, that the rectification of the title number was not made by the Land Registrar, and therefore it is not a valid charge on the property. I will deal with these issues together. I must start by stating that from the evidence presented before me, it is not disputed that the Claimant offered her property on title number Blantyre Central 650/17 as security for the two loans that she had obtained from the Defendant. It is also not in dispute that as part of compliance with the loan conditions, the Claimant handed over the title deeds for her property to enable the bank to create a charge over the property. The title deeds were not in respect of title number Blantyre Central 680/17, but Blantyre Central 650/17. There is no question as regards the Claimant’s sntention to have her property charged by the Defendant. In this regard, she submitted her title deeds in respect of her property title number Blantyre Central 650/17 to the Defendant for that purpose. In NBS Bank Limited v. Dylan Mafunga, MSCA Civil Appeal No. 22 of 2012 (Being High Court Commercial Case No. 2 of 2012) the court observed as follows: “We agree that at common law the mere deposit of title deeds of freehold or leasehold property made by one party to another by way of security creates a mortgage or a charge in equity. This is what Peter Gibson LJ referred to as prima facie evidence of a contract to mortgage in the case of United Bank of Kuwait v. Sahib and others [1996] 3 AILER 215 at 220-221.” I would like to agree with the above proposition that the fact that the Claimant submitted her title deeds for her property title number Blantyre Central 650/17, is prim facie evidence that she entered a contract with the Defendant to mortgage or charge her house on title number 7 Blantyre Central 650/17 and not Blantyre Central 680/17. In that regard, I support the Defendant’s submission that the indication of the title number as Blantyre Central 680/17 as security for the loan both in the offer letter and the Loan Agreement was a mistake. In my view, the error did not invalidate the contract that the Claimant and the defendant entered in respect of the creation of a charge on property title number Blantyre Central 650/17 in favour of the Defendant. I have considered the allegations levelled by the Claimant against the Defendant. My view is that these allegations are dangerously wild and were made without an honest basis on the part of the Claimant. Lam further inclined to believe the Defendant that the error in respect of the title number was identified by MHC at the time they were processing the license and consent for the property to be charged. Upon discovering that the title number was wrong, they proceeded and issued a licence and consent bearing the correct title number, Blantyre Central 65 0/17. This resonates with the agreement between the Claimant and the Defendant. Further, | would like to observe that under paragraph 31 of the Claimant’s witness statement, she tendered a valuation report exhibited as “OM15”. The valuation report was compiled by Lipimbi Property Services. Paragraph 2 of the report highlights the issue of the mistake in the numbering of the title number for the property. It then sent ahead to state in the next paragraph that the valuer proceeded and valued the correct property on title number Blantyre Central 650/17 (plot number BC1040/9). In the report, under the heading “Property Encumbrances” they submitted as follows: “Records which are kept at Blantyre Land Registry also show that there is financial transaction/charge currently registered against the property by NBS Bank Limited amounting to K7,500,000 secured under Application Number 2493/201] (see Appendix).” Unfortunately, whether by design or omission, the Claimant did not exhibit the whole copy of the valuation report as it excluded the Appendix. However, the same valuation report was tendered by the Defendant’s first witness, Mr. Madalitso Phiri in his statement as exhibit “MCP4”. On page 12 of the report there is item 7.0 headed “Appendix”. Under the said item there is reference to Property Ownership Records under which there were two documents attached, a Certificate of Official Search for Title Number Blantyre Central 650/17 issued on 25 October 2016, and the Lease document for the property. Part C of the Certificate of Official Search is the encumbrances section confirms that there was a charge on the property, application number 2493/2011 to secure the sum of K7,500,000. The proprietor of the charge was the Defendant. From the totality of the evidence presented before me, it is very clear that the Claimant intended to have her property on title number Blantyre Central 650/17 charged for the loan she had accessed from the Defendant. It is further very clear that she submitted title deeds for title number Blantyre Central 650/17 which is prima facie evidence that the Claimant and the Defendant had entered into contract to charge the said property as security for the loan she had accessed. Most important of it all, the Certificate of Official Search shows that there was an 18 encumbrance on the property, being a charge in favour of the Defendant. With the foregoing, it is my finding that there was a valid charge on title number Blantyre Central 650/17 in favour of the Defendant. Accordingly, the Defendant had the right to exercise its power of sale on the property in question. Having found that there was a charge on title number Blantyre Central 650/17, I now deal with the Claimants contention that the charge was invalid because it was registered before the Claimant accessed the loan. The Claimant argues that the charge was registered on 24 March 2011, long before the Claimant got the loan offer or signed the Loan Agreement on 21 July 2011. The Claimant therefore protested the Defendant’s exercise of the power of sale based on a suspicious charge. She therefore argued that the same was invalid. It is very clear that the Claimant's argument is based on the date that is written on the front cover of the charge. In my view, the date appearing on the front page of a charge, or any document registered at the Land Registry, is hardly evidence of the date of registration of such document. I take judicial notice that evidence of the actual registration date of a charge, or any document filed at the Land Registry is ascertained by the date appearing at the back of the last page of the registered document. This date appears on a stamp that is customarily placed on the upper left hand of the back page. The stamp contains details of the registered document such as the application number, the date and time on which it has been registered, the time for registration, the stamp duty, and the registration fees paid. Unfortunately, the Claimant, whether by design or by omission, did not include this important and crucial back page. Accordingly, the Claimant’s argument that the charge was registered on the 24 March 2011 is speculative and incorrect. My view is fortified by the fact that the date on the cover of the charge, i.e., 24 March 2011, and the date on which the Claimant signed the charge are completely misaligned. The Certificate at to Verification of Instruments contained on the last page of the charge shows that the Claimant executed the charge on 25 July 2011, four days after signing the Loan Agreement. My position is further fortified by the fact that the MHC granted the Defendant the licence and consent to create a charge on the property on 10 August 2011. Surely, it cannot be true to state that the charge was registered over the property without any consent from the Lessee, MHC. Further, it surely does not make sense to suggest that the charge was registered on 24 March 2011, yet the Claimant, the chargor, signed it on 25 July 2011, and the license and consent was issued on 10 August 2011. Considering that the two i.e., the chargor’s signature and the license and consent from the lessee are prerequisites, the charge must have been registered after 10 August 2011. Accordingly, it is my firm view that the date appearing at the front page of the charge is misleading and state without any contraction that it is not the date of registration of the charge. It is my view that the charge was registered after the Claimant signed the charge and after MHC granted its consent. This was well after the Clamant signed the loan offer and Loan Agreement. Having found the above, I will not belabour the considering the Claimants argument on the rectification of the charge by the Registrar. The Certificate of Official Search in respect of the 19 property shows that there is a charge on the property duly registered in favour of the Defendant. Unless otherwise proved, this is conclusive evidence that the charge was duly registered by the Blantyre Land Registry after all formalities and procedures under the law were satisfied. In the absence of any such proof to the contrary, it is my finding that the Defendant had a duly registered and valid charge over property title number Blantyre Central 650/17. Having established that the defendant had a duly registered and valid charge on property title number Blantyre Central 650/17 the next question I should consider is whether the Defendant exercised its power of sale over the said property illegally and in contravention of section 71 of the Registered Land Act. I note that the Claimant has raised several issues in support of its position that the Defendant exercised its power of sale illegally. Among other things the Claimant argues that the Defendant proceeded and sold the property without any statutory demand as required by section 60(2) of the Registered Land Act. The Claimant argued that the letter that the defendant wrote the Claimant exhibited as “OM7A” and another one exhibited as “OM7B” did not constitute a statutory notice because these letters referred to property on title number Blantyre Central 680/17 and not 650/17. On that basis, the Claimant argued that there was no statutory notice and that consequently, the Defendant had no right to exercise power of sale. Exhibit “OM7A” is a letter dated 8 April 2015 from the Defendant to the Claimant. It reads as follows: “Dear Miss Mijoso DEMAND NOTICE ON MORTGAGE ACCOUNT 0071-723622-17 We refer to the conversation that you had with ours Mrs Bertha Maseko on telephone and e- mails concerning the above matter. You had stated that you intend to settle the arrears through proceeds from sale of your house which is under construction in Angelo Govea. However, this is not your first time for you to say so. In the month of May 2013 with reference to your conversation with Miss Rose Kanyandula you talked about bringing to sale your house in Naperi of which proceeds did not settle arrears. The status of the account as at 8" April 2015 is as follows: Capital Balance: MK7,846,334.09 Instalment: MK348,527.99 Arrears: MK 18,368, 100.61 The arrears represent 52.7 months of non-payment, a situation the bank will not allow to continue. We have given you ample time to regularise the account, so we demand that you settle total debt in 90 days from the date of this letter, failure to which the Bank will be compelled to commence realisation of security. We trust you have been guided accordingly. Yours sincerely, Rose Kanyandula. RECOVERIES MANAGER.” This letter, which is self-explanatory, was followed by another one dated 12 October 2016, 18 months later. The 12 October 2016 letter reminded the Claimant about the earlier letter and that she was given 90 days to make full settlement of the overdue amounts. The Claimant was advised that her non-compliance with the earlier later had left the Defendant with no option but to sell the property. The letter further advised the Claimant to pay the overdue amount within 7 days failure of which the bank was going to proceed and engage valuers to determine the market value of the house and was going to proceed and advertise the property for sale. Section 60(2) of the Registered Land Act reads as follows: “A date for the repayment of the money secured by a charge may be specified in the charge instrument, and where no such date is specified or repayment is not demanded by the chargee on the date specified the money shall be deemed to be payable three months after the service of a demand in writing by the chargee.” In brief, Section 60(2) of the Registered Land Act demands that a chargee must issue a 3- months’ demand notice before the sums owing by a chargor are deemed payable. Such demand notice must be made in writing. In Nkhumbwe v. National Bank of Malawi, Civil Cause No. 1702 of 2000 it was stated that it is established principle of chargee contract that if a borrower failed to pay the lender, then justice demands that the lender must have recourse to the security for the loan without regard to the hardship on the borrower. In the case Mwaungulu, J as then he was, reasoned as follows: “On correct construction of section 60(2) the chargor must prove two things. First that the chargee demanded payment. Secondly, he defaulted for three months from the date of notice. The chargee can stipulate that the money be paid within three months. Section 60(2) means the chargor is not in default until after three months. The chargee can demand immediate payment or within a short time. The mortgagor has however three months to pay. The chargee has three months before resorting to her remedies.” The letter from the Defendant to the Claimant dated 8 April 2015 was very clear. It gave the Claimant 90 days within which she was supposed to settle the overdue amounts. The letter specifically advised the Claimant that failure to settle the amounts demanded was going to result into the Defendant proceeding to realise security. In my view, in terms of statutory notice under the Registered Land Act, this letter was enough. The other letter dated 12 October 2016 was just a reminder, a simple act of benevolence on the part of the Defendant. The Claimant’s argument that those two letters related to property on title number Blantyre Central 680/17 is without any substance. Firstly, it was settled in evidence that the Claimant presented property on title number Blantyre Central 650/17 as security for the loan. Secondly, + is clear in evidence that property title number Blantyre 680/17 was fictitious, it did not exist at all. Thirdly, it has been settled by this court that the Defendant registered a charge on title ai number Blantyre Central 650/17. Surely, the Claimants insistence that the two letters that were written by the Defendant related to property on title number Blantyre Central 680/17 is mindboggling. I wonder how the Defendant could have issued a statutory notice on a property which did not exist, which the Claimant never surrendered its title deeds for it to be charged, or where there was no charge at all. In my mind, there is no contest at all. The statutory notice was issued in respect of property on title number Blantyre Central 650/17. In as far as the evidence herein is concerned, the statutory notice satisfied the two critical issues under section 60(2) of the Registered Land Act namely; that the Defendant had demanded payment, and that the Claimant defaulted in those payments. In my view there was no obligation on the part of the Defendant to specifically state that they were proceeding to sell property title number so and so as the parties knew exactly which property was in question. Accordingly, it is my finding that the Defendant duly issued a valid statutory demand to the Claimant prior to exercising its power of sale on property title number Blantyre Central 650/17. The Claimant has along the way further argued that the Defendant did not set any reserve price for the property and as such the sale proceeded in contravention of section 71 of the Registered Land Act. I will not belabour the issue but outrightly state that there was no obligation on the part of the Defendant to obtain a reserve price for the property as it was sold by private treaty. The requirement to obtain a reserve price is only applicable when a property is being sold by auction as held in New Building Society v Mumba [2001-2007] MLR Com 243. In this case, the Supreme Court on page 248 stated as follows: “What we have said above also takes care of the next question, namely, whether by selling the property by private treaty and without a reserve price the appellant can be said to have acted in bad faith as would warrant rescission of the sale. It seems to us that the question does not now arise because, we have said, the appellant was at liberty to sell in the way it did (i.e., by private treaty). It is only when the option to sell by public auction has been taken that it becomes a requirement to sell subject to a reserve price as the Land Registrar may approve.” I therefore entirely adopt the determination of His Lordships in the New Building Society v Mumba case above and hold that it was not a requirement or the Defendant to obtain a reserve price as the property was sold by private treaty. All in all, I find that the Defendant did exercise its power of sale on property title number Blantyre central 650/17 in line with section 71 of the Registered Land Act. On whether the interest charged by the Defendant on the Claimant’s loan was excessive, unreasonable, and unconscionable in terms of section 3 of the Loans Recovery Act, I must observe that the Reserve Bank of Malawi (RBM) is responsible for fixing the policy rate that in turn guide retail banks in respect of their base lending rates. When it comes to lending their money, retail banks are, however, given some room to add a few percentage points on their base lending rates depending on how they view their risk and margins in respect of a particular borrowing. This issue has of course attracted a lot of debate in the country and elsewhere. ee In the country, some quarters have demanded that there is need to introduce legislation to cap interest rates so that retail banks should not allowed to wantonly decide what percentage points they could add above their base lending rates. On the other had some have defended the current policy arguing, among other things, that capping interest rates was going to discourage the supply of money to the financial system which in the end was going result in the rise of informal black-market lending. It has also been argued that doing so could also force banks to scale down their investment in unprofitable and non-strategic branches, especially in the rural and remote areas, which may result in their closure. This may deny a lot of people an opportunity to access financial services. While the two sides continue sizing each other up on the subject matter, it is clear that in the case at hand, the Claimant was charged interest at the base lending rate, which was then at 17.5% plus 1.5% which made it 20% per annum for a loan that she accessed in the sum of K7,500,000. Upon obtaining of the second one, the two loans were consolidated, and the rate of interest was fixed at 17.5%. It was a term in the Loan Agreement that the interest rate was subject to increases or decrease. This had a corresponding effect on the monthly loan repayments. It is in evidence that, during the period, the Defendant’s base lending rate gradually rose from the 17.5% and peaked at 42% by April 2013. It then gradually went down to 33% in December 2016. I have not been favoured with any evidence in this this court to suggest that the Defendant’s base lending rates were unreasonably way above the rates set by the RBM nor that the Defendant was charging the Claimant interest that was way above what the other banks were charging on the market. The fluctuations in the Defendant’s interest rates were simply responding to the fluctuation of the policy rate set by the RBM in line with the economic environment in the country at the time. I have not been favoured with any evidence by the Claimant to show anything to the contrary. Moreover, when the defendant consolidated the two loans, it did not factor in any additional percentage points to the interest rate. It simply retained the 17.5% interest on the consolidated loan. Therefore, the Claimant’s argument that the Defendant was charging them interest rates that were excessive, unreasonable, and unconscionable under section 3 of the Loans Recovery Act cannot be sustained. On whether the Defendant was justified in charging additional finance charges or penalty or default interest in respect of the loan, it is very clear from paragraph 3 of the charge that has been tendered and exhibited as “OM4” that penalty interest was payable if the Claimant failed to pay the agreed monthly instalments. Further, paragraph 4.3 of the Loan Agreement between the Claimant and the defendant provided that the Defendant was obliged to charge additional rate of finance charges or interest on any overdue amounts that the Claimant failed to pay in respect of the Loan Agreement. This has not been admitted by both the Claimant and the Claimant’s witness. In Harry Gunda t/a Hall Protective Clothing General Dealers v. Indebank Limited, Commercial Case No. 186 of 2015, it was held that where there has been a default by a borrower, like in the present matter, the law and equity will operate to ensure that the lender gets only such money as would compensate it for the financial prejudice occasioned by such Pe) a default and not more. The charging of default or penalty interest was declared void in that regard. The above position was also echoed in National Bank of Malawi Limited v. Lilongwe Gas Company Limited, Commercial Case No. 165 of 2016. In this case Katsala, J., as then he was, stated the rationale for the position in the Harry Gunda case on page 10 where he stated as follows: “In my judgement, compound interest would and does take care of the fear that may have exercised the judge’s mind for him to come up with the suggested percentages of interest. When money is borrowed on compound interest basis, a borrower who defaults on repayments pays interest on interest because the interest which accrues during the period he is in default is capitalised. This means that when a borrower defaults on loan repayments, he suffers more interest because the longer he keeps the money, the more interest on interest he will pay. In my view, this takes care of the greater credit risk associated with a borrower in default. The lender is compensated for being kept out of the use of has money by the compound interest that continues to accrue on the loan. It is sufficient compensation for the greater credit risk. As such, there is no justification for the lender to demand additional interest on top of the agreed interest simply because the borrower has defaulted on repayments.” I must say that the above summarises the current position as regards charging of penalty or default interest, or indeed the levying of any additional charges where there is default, and I am not about to depart from it. In the present case, it is not in dispute that the Claimant and the Defendant agreed that there was going to be extra charges or default, or penalty interest charged on the Claimant’s loan account for any default in the monthly loan repayments. This court is mindful of the position stated by Sikwese, J. in Coombes t/a Millenium Trading v. CDH Investment Bank, Commercial Case No. 65 of 2015 that it is not the duty of the courts to change terms of a loan agreement or contractual terms agreed upon by the parties. It was highlighted that the duty of the court is to simply consider the terms and conditions of the loan agreement and then construing the same as intended by the parties. In the same breath, it was acknowledged in the same case that the court may however consider factors other than those in the contract. As noted above, I have considered the loan agreement between the Claimant and Defendant. As stated, additional charges, or default or penalty interest was agreed upon by the parties. This issue was extensively covered and resolved in the National Bank of Malawi Limited v. Lilongwe Gas Company Limited case. The words of Justice Katsala nailed the fact that where interest was applied on compounding basis, it compensates the lender for the default occasioned by the borrower. As such there is no need for the lender to charge additional charges, default, or penalty interest because the compounding of interest was sufficient compensation for the Defendant’s greater credit risk. In other words, the penalty or default interest charged by the Defendant was not a genuine pre-estimate of the actual damage to be suffered by the Defendant because of the Claimant’s failure to repay a loan on the agreed due dates. See Harry Gunda t/a Halls Protective Clothing General Dealers v. Indebank Limited (supra). In respect of the 24 current matter, it is my view, that there was no justification for the Defendant to charge penalty or default interest against the Claimant regardless of it being provided in the loan agreement. Accordingly, I find the same in favour of the Claimant. The Claimant has called on this court to annul the entire loan agreement on the basis that the Defendant charged the Claimant default or penalty interest. It is the Claimant’s argument that the loan account fell into arrears simply because of the default or penalty arrears that were charged onto her account by the Defendant. In the same vein, the Claimant further called upon this court to set aside the sale of the property on the basis that the Claimant failed to service her loan because of the default or penalty interest, and other charges on the loan account. The Claimant has pleaded that she cannot be classified as having defaulted on the loan since all this was because of the Defendant’s unlawful conduct. She has termed the Defendant’s conduct as “extravagant, unconscionable, and downright oppressive”. I have considered the Claimant’s submission in the above regard and cannot believe the chord that the Claimant is attempting to strike. It is very clear from the evidence presented before this court that the Claimant was a serial defaulter. When she made her first drawdown of the funds, she was expected to start her loan repayments the following month, November 2011. However, she disappeared and only came back to make a payment in February 2012, four months later. And when she made this payment, she disappeared and only came back for the next repayment in July 2102, five months later. It is in uncontradicted evidence that she did not even make a single repayment the whole of 2013. Cumulatively, she defaulted in her repayments for 52 months out of the 172 months. In other words, she defaulted for 4.3 years out of the 14 years granted to her. Surely, this is a behaviour which no court of equity can entertain or have any sympathy for. For the Claimant to eventually come back now and lay blame on default or penalty interest as a reason for her failure to make the repayments, amounts to insincerity and dishonesty, and a cynical attempt to manipulate this court. It is an attempt on the part of the Claimant to go away with both the money and the property. It shall not prevail. From the evidence presented herein, the Claimant’s loan fell into arrears out of her own sheer making from the time she accessed the funds. How can one go for a whole year without meeting his or her financial commitments and expect a court of equity to have sympathy? I find the Claimant’s arguments insincere and without a hint of any substance. I dismiss them in their entirety. The next issue I need to deal with relates to the Claimants submission that the loan interest calculations where fraught with accounting errors and that the Defendants added debits to the account which were not agreed between the parties. The Claimant has submitted that in summary, the unauthorised charges, excess charges, default/penalty interest, charges unauthorised by the loan offer/loan agreement have totalled K16,260,183.83. From the evidence presented before me, there is confusion on the part of the Claimant’s second witness because at the time he was compiling his sworn statement and report, he did not understand why some debits were made on the Claimants account and for what purpose. He did not further understand the basis of the monthly repayments and proceeded on different assumptions. It is clear from the evidence of the Defendant’s fist witness that at the time that the Claimant was accessing the loan, she was supposed to meet some advance payments for the bank cheque, lawyer’s professional fees, stamp duty, and registration fees for the charge etc. She did not pay the same upfront because apparently, she did not have any funds. These funds that were paid by the Defendant on behalf of the Claimant and debited to her loan account. Further, at the time that the Claimant accessed her additional loan, the loan offer was very clear as regards the 1.5% processing fees, and 0.5% drawdown fees on the loan amount plus 16.5% VAT on the fees. It was made clear by the Defendant in the loan offer letter that these fees were payable upon disbursement of the loan, and that she was at liberty to pay the same by cash or cheque if she wished that they should not be added to the principal amount. From the Defendant’s evidence, the bank paid these amounts on her behalf because she did not have cash. It was explained that these amounts were all supposed to be paid in advance by the Claimant and were not covered under the interest moratorium reflected in the agreement. The interest for these advanced amounts is chargeable immediately and that was why interest was charged on the Claimant’s account on 31 August 2011, 30 September 2011, and 31 October 20, In terms of the monthly repayments of the instalments the evidence before me suggests that the Claimant’s consultant was wrong in assuming that the monthly repayments were going to be the same across all the months. He admitted in cross examination that the linear method of repayment allowed for changes in the monthly instalments because of changes in interest rates. He further submitted that he did not understand the basis of the sum of K8,194,991 which was the consolidated total sum of the Claimants first loan and the additional loan. On his questioning of the instalment figure of K207,612 for the first loan, and then K231,945.74 for the second loan, it is very clear that the Claimant’s second witness never had the benefit of looking at the two loan offer letters that were sent to the Claimant prior to signing of the Loan Agreement. The offer letter was very clear that the instalment figure of K207,612 included the life insurance and property insurance otherwise the repayment of the principal and interest only was going to amount to K191,250. Accordingly, the premise on which the Claimant’s second witness calculated his amortisation tendered in this court based on the figure of K10,742,867.03 was wrong. On the unauthorised mortgage account transfers, the Claimant has argued that these amounts were debited on her account without her authorisation, and questioned what exactly these amounts were. On the other hand, the Defendant has explained that mortgage account transfers were was a generic code that was used by the bank when one processing the account does not find a specific code. The Defendant demonstrated familiarity with the figures presented as mortgage account transfers and stated that some were the Claimant’s drawdowns, and others insurance. I must say that I am satisfied on a balance of probabilities that the figures contained in the statement were correct. 26 From the totality of the evidence before me, I agree with the Defendant that most of the Consultant’s calculations were based on wrong assumptions. For example, the Claimant’s second witness never considered the long period of loan repayment default by the Claimant, never considered the impact of fluctuation of interest rates that it had on the monthly repayments, never understood the basis of the monthly deductions. It will be unsafe for me to accept these calculations. Accordingly, I do not share the Claimant’s view that the Defendant’s interest calculations were fraught with accounting errors, and that there were additions on the Claimant’s loan account that she was not aware of. The Claimant knew what amounts she was supposed to pay prior to the accessing of the funds and was given an option to pay these amounts directly to the bank or have them paid by the bank on her behalf. She never paid the same and the bank advanced her those amounts. Surely, the bank is not in the business of giving out free money. Those monies attracted interest. On whether Ms. Chatha had participated in the evaluation process for the sale of the property and had inside information, the Claimant argued that the purchaser was one of the people who took part in the evaluation of the bids and claimed that this was the reason the Defendant failed to avail to them minutes of the evaluation. She alleged that the Defendant’s failure to surrender the minutes of the evaluation meeting was deliberate because they were going to show that the said Ms. Chatha attended the meeting as part of the evaluation panel. The Claimant argued that since Ms. Chatha had inside information in respect of the sale of the property, she was not eligible to buy the same. The Claimant pressed his emphasis by referring to section 46 of the Banking Act, Cap 44:01 of the Laws of Malawi provides as follows: “(1) No director or officer of a bank shall take part in the discussions of or taking a decision on any matter in which that person or any of his close relation has an economic interest. (2) In any meeting where subsection (1) applies, every director or officer shall inform the meeting of his interest or that of any of the parties mentioned in subsection (1) and to the extent that the discussion or decision concerns any matter in which he has an interest, shall exclude himself from further attendance at that meeting.” The Claimant submitted that their position was fortified by the Defendant’s decision not to call Ms. Chatha as a witness after they had earlier indicated so because they were afraid that she was going to concede having participated in the evaluation. The Claimant further submitted that she was going to concede having bought the property using a borrowed amount of K46,000,000 from the Defendant. The Claimant argued that the Defendant was aware that foreclosing a borrower’s property and selling it to its own staff member who then applies for a loan to buy the very same property was the worst kind of unconscionable conduct that no corporate entity would have had its witness concede the same in cross examination. On its part, the Defendant confirmed that the property was offered to and subsequently purchased by the said Ms. Chatha after she submitted the highest bid for the property at K60,000,000. The Defendant disputed the Claimant’s allegations and stated that the said Ms. Chatha did not and was not part of the 5-member team that opened bids and conducted the evaluation of the same. They further argued that Ms. Chatha did not have any information as i) ~] regards the sale of the property by the bank. If anything, the information that she had was gathered from the Claimant herself. Having heard the parties, | will deal with the two issues separately. Firstly, I must deal with the issue of inside information. In my view, inside information relate to that information that Ms. Chatha may have obtained from the Defendant prior to the submission of her bid and had used that information to her advantage in the bidding process. I must observe that there is evidence that there had been several engagements between Ms. Chatha and the Claimant in the run to the sale of the property. This included the two physically going to see the Claimants house in the company of the Claimant’s estate agent and then an offer being made for the purchase of the property by the said Ms. Chatha. Further, it is in evidence that it was the Claimant herself that informed Ms. Chatha that she was selling the house because she had commitments with the Defendant. In that regard, I find it very dangerous to conclude that Ms. Chatha had obtained inside information from the Defendant in respect of the sale of the property when it was very clear that she had prior interaction with the Claimant and the Claimant’s agent on the same subject matter. Inevitably, a lot may have been said during this interaction. In any case, the Claimant has not demonstrated how Ms. Chatha obtained information from the Defendant and used the same to her advantage. All I have from the Claimant are inferences that do not go beyond mere speculation i.e., that the Defendant failed to call Ms. Chatha as a witness, and that it failed to avail minutes of the evaluation of the bid. The other inference that was drawn by the Claimant was that since she had written an email to the Defendant indicating that she was going to let the property go above K60,000,000, and Ms. Chatha submitted a bid in the sum of K60,000,000, the same meant that she had inside information. This issue was very contentious between the parties. However, I would like to agree with the Defendant that a price of “over K60,000,000” is not the same as a price of K60,000,000. I would therefore be very reluctant to accept the said inference as evidence that the purchaser had inside evidence. Secondly, on the alleged participation of Ms. Chatha in the evaluation of the bids, I am at pains to accept the evidence presented by the Claimant in this regard because it is all but mere assumptions. All these assumptions had originated again from the fact that the Defendant failed to call Ms. Chatha as a witness and did not provide minutes of the bid evaluation for the purchase of the property. The Defendant did argue that the minutes were not available, but the Claimant insisted that they were and made mention of the fact that the Defendant initially wrote the Claimant allegedly attaching the said minutes before subsequently writing back indicating that the same did not exist. To my mind, this Court will be going too far to accept this fact as evidence that Ms. Chatha participated in the evaluation. I was going to think twice if this fact was corroborated by more evidence in that regard. In the premises, I again feel very uncomfortable to accept this evidence as conclusive to the issue in question. On both issues it is my view that the Claimant has failed to discharge the burden of proof required in cases of this nature, on a balance of probability. hm oD On whether the purchaser of the property was in fiduciary position to the Claimant, I must start by stating that fiduciary position refers to a legal or ethical relationship of trust between two parties in which one party is entrusted with the responsibility to act in the best interest of the other party. A fiduciary position requires that the fiduciary exercises a higher level of care, loyalty and good faith when making decisions on behalf of the beneficiary. From the evidence have before me, I am failing to appreciate the Claimant’ s argument that the purchaser was in a fiduciary relationship with the purchaser of the property Ms. Chatha. Ms. Chatha was no entrusted with any responsibility to act or decide in a certain manner for the benefit of the Claimant. In any case, it is in evidence that Ms. Chatha had been in contact with the Claimant several times after the Claimant had placed the property on sale because she was interested in the Claimant’s property. It is in evidence that they went as far as going to see the property and had discussions on the purchase price with the Claimant. Why did the Claimant in the first place allow to have discussions with Ms. Chatha when she knew that she was an employee of the Defendant? In my mind, there was no fiduciary relationship between the Claimant and Ms. Chatha in this transaction. The relationship between the Claimant and Ms. Chatha at the time of their engagement did not go beyond that of a prospective seller and a prospective buyer. The fact that Ms. Chatha was an employee of the Defendant at the time she was submitting a bid to purchase the property did not create any fiduciary relationship between the Claimant and Ms. Chatha. It is very clear that the transaction in this regard was between the Claimant and the Defendant, and Ms. Chatha was a mere third party. I therefore find no existence of any fiduciary relationship between the Claimant and Ms. Chatha. Even if I did find that there was such relationship, it would be non-consequential because there has been nothing to suggest that Ms. Chatha had acted in breach of any relationship in as far as the Claimant is concered.. On the other hand, the relationship that was apparent in this matter was that of the Claimant and the Defendant, a mortgagor and mortgagee, respectively and this was the Claimant’s basis for her claim that the Defendant did not act in good faith in respect of the sale transaction. I will now deal with point. In as far as exercise of power of sale by a mortgagee, it is governed under section 71(1) of the Registered Land Act. It provides that a mortgagee exercising its power of sale, has a duty to act in good faith and must have regard to the interests of the mortgagor. It requires the mortgagee to prove that he had acted in good faith and that reasonable precautions had been taken in the sale. Once that is done, there is no case for the mortgagor. In Cuckmere Brick Co. Lid v Mutual Finance Ltd [1971] Ch. 949, the Court of Appeal held that a mortgagee is not a trustee of the power of sale of the mortgagor but that the mortgagee is merely under a duty to act in good faith, without any reckless regard for the interest of the mortgagor, and to take reasonable care to obtain true value of the property at the time he chose to sell it. In McHugh v. Union Bank of Canada [1913] AC 299, the Privy Council opined that: i) \O “Tt is well-settled law that it is the duty of a mortgagee when realising the mortgaged property by sale to behave in conducting such realisation as a reasonable man would behave in the realisation of his own property, so that the mortgagor may receive credit for the fair value of the property sold.” Further, in Tse Kwong Lam v Wong Chit Sen [1989] 1 WLR 1349, it was held that a mortgagee who wished to secure a mortgaged property for a company in which he had interest ought to only show that he protected the interest of the borrower by taking expert advice on the manner of the sale, the steps taken to make the sale a success and as to the amount of the reserve price. Itis clear in this matter that the Claimant defaulted in the repayment of the loan. The Defendant proceeded and issued a statutory notice to the Claimant. The 90 days went by without the Claimant doing anything in terms of payment. Way after so many months, the Defendant wrote the Claimant again reminding her about of her obligations. She responded by trying to counteroffer on the conditions that the Defendant asked her to commit for it to reschedule the loan. These were rejected. After the rejection, the Claimant gave the Defendant a go ahead to sell the property. The property was valued and advertised. Bids were received. The property was then offered to the highest bidder, who happened to be the Defendant’s employee. I do not see any hint of bad faith on the part of the Defendant in this matter. The fact that the property it was sold to an employee of the Defendant may raise eyebrows. However, in the absence of any evidence showing that there was fraud, or bad faith in the exercise of the sale, it does not make the same illegal. As long as the interest of the borrower was considered, it stands good. See Tse Kwong Lam v Wong Chit Sen (supra). The Claimant’s submissions in this regard are baseless as I did not find any instance of bad faith in respect of the Defendant’s conduct, The fact that the Defendant did not seek her permission for it to offer the property to the purchaser is non-consequential as it is not a requirement under the relevant provision. At this point, let me also refer to two other points argued by the Claimant in her submission. The first one was that Ms. Chatha was not a bonafide purchaser of the Claimant’s property for value without notice and therefore not eligible to buy the same. The Claimant argued that the purchaser had notice of an irregularity in the charge that was created by the Defendant and was aware of the proceedings that she had commenced in court in respect of the sale of the property to her. The Claimant therefore argued that being the case, she had notice of the illegality of the Detendant’s power of sale and cannot be protected by section 71 of the Registered Land Act. As I have earlier found, the charge that was created in respect of the property was valid. The question of there being a defect in the charge that empowered the Defendant to sell the property did not, and does not, arise. Further, the fact that the Claimant had commenced proceedings in court against the Defendant did not act as an estoppel or a stay in the sale of the property. Moreover, the purchaser was not a party in those proceedings, and there is no evidence presented in this court to show that she was aware of the same. Accordingly, the purchaser cannot be classified as a purchaser with notice of a defect because there was no defect at all. The second one was on the manner in which the purchaser was going to pay for the property. She claimed that the purchaser of the property had made part payment of the purchase price 30 and the rest was going to be paid through a loan that she got from the Defendant. The Claimant loathed such manner of payment and claimed that the manner in which the Defendant acted was despicable. I must say that the Claimant’s claim fell outside the realm of section of section 71 of the Registered Land Act. The provision does not prescribe the manner or mode of payment where a mortgagee has exercised its power of sale. In conclusion, my findings in summary are that the Defendant had a valid charge over property title number Blantyre Central 650/17 and had the right to exercise its power of sale of the property under the charge. In that regard it was my further finding that the Defendant did exercise its power of sale over the property in good faith in line with the provisions of section 71(1) of the Registered Land Act. It is also my finding that the interest generally charged in respect of the loan amount was not excessive, unreasonable, and unconscionable in terms of section 3 of the Loans Recovery Act. It was my further finding however that it was illegal for the Defendant to charge the Claimant default or penalty interest, notwithstanding the fact that the Loan Agreement had provided the same, as it did not represent the Defendant’s genuine pre-estimate of loss and was already covered by compound interest that the Defendant was charging on the account. Further, it is my finding that the Claimant used wrong assumptions in its loan interest calculations and in its argument that the Claimant’s loan account was fraught with accounting errors. It was my finding that the Claimant was aware of the debits that were added to her loan account and the reasons thereof. It is my further finding that there is no evidence to suggest that the purchaser had inside information and had participated in the evaluation process in respect of the sale of the same. Further, it was my finding that the purchaser, in this transaction, was not in any fiduciary relationship with the Claimant, and was legally qualified to purchase the house. In this regard, this action succeeds only in respect of the claim on the default or penalty interest. The rest of the claims fail in their entirety. In respect of the claim on the default or penalty interest, I hereby order that the said default or penalty interest that was charged on the Claimant’s loan account and collected by the Defendant be assessed by the Registrar and be paid back to the Claimant at 1% above the Defendants lending rates from the date each component of the total sum was charged, to the date of this judgement. In respect of the costs, it is settled that these are at the discretion of the court. However, generally, they follow the event. Looking at the current matter however, it is my considered view that it will be fair if each party bears its own costs, and I so order. Made in Open Court at Blantyre this NFScptembe 20233 ( Jabbar Alide JUDGE 3]