Mozi Consulting Ltd and Ors v First National Bank Zambia Ltd (SCZ 8 243 of 2016) [2017] ZMSC 235 (1 March 2017)

JI THE PARTIES AGREED TO STOP THE CASE IN NDOLA, MARCH, 2017 IN THE SUPREME COURT OF ZAMBIA HOLDEN AT NDOLA SCZ/8/243/2016 Appeal No. 198/2016 (Appellate Jurisdiction) BETWEEN: MOZI CONSULTING LIMITED MOHAMMED MULENGA ZIPPORAH MBEWE MULENGA AND 1st APPELLANT 2nd APPELLANT 3rd APPELLANT FIRST NATIONAL BANK ZAMBIA LIMITED RESPONDENT Coram: Wood, Malila and Mutuna, JJS on March, 2017 and.... March, 2017 For the 1st Appellant: Mr. N. Chanda, Nicolas Chanda & Co. For the 2nd Appellant: For the 3rd Appellant: For the Respondent: JUDGMENT Malila, JS, delivered the Judgment of the Court Cases referred to: J2 This appeal is about a borrower who sees injustice in the manner in which the respondent bank conducted the borrower’s account. This follows the provision by the respondent bank to the borrower of three loan facilities. The appeal challenges what the appellant views as unconscionable conduct of a bank and poor or unsatisfactory relationship terms under which the appellant endured what are seemingly extortionate bank debits on its account at the whims of the respondent bank for charges the appellant never agreed to or was not aware of. More significantly, the appeal questions the conversion by the respondent bank of what, according to the appellant, should have been loan facilities into overdraft facilities without agreement. Yet, the appeal is also about a banker’s need to cover its operational costs by maintaining its revenue streams through bank charges. It is furthermore about the acceptability or otherwise of the explanation that a banker’s charges are not about profiteering and exploitation of its customers but are in the best interest of both customers, and by extension, the business world and the bank itself. J3 Sometime in the latter half of 2012, the appellant approached the respondent bank and requested for a loan to facilitate the confection of a hotel. Three facilities were availed to the appellant as follows: The first in the sum of K3,500,000, termed as a business term loan, was given in terms of a letter of 15th August, 2012; the second was also dubbed as a business term loan and was for K600,000 given in terms of a letter dated 19th April, 2013 and the last one called a ‘credit facilitator’ was for K7,500,000 given through a letter dated 20th June, 2014. The terms of those credit facilities are all set out in the respective facility letters. A loan agreement was also executed by the parties on 6th September, 2012 when the first loan facility was given. Interest on the facilities was to be charged at the Bank of Zambia Monetary Policy Rate being 12% plus a margin of 8%. The facilities were secured by first legal mortgages registered over Subdivision C of Stand No. 4060 Chingola, Subdivision 2 of Stand No. 12092 Lusaka and Subdivision ‘Bl’ of Stand No. 12092 Lusaka, all of which were registered in the name of the first appellant. The facilities were further secured J4 by unlimited suretyship/guarantor provided by the second and third respondents. The facilities were to expire after a period of 120 months with interest and capital repayments being serviced monthly from the date of draw down in equal monthly installments. The appellant defaulted in its repayment obligations. Consequently, an originating summons was filed in February 2016, the respondent bank sought repayment of all monies outstanding on the facilities, which as at 28th January 2016, according to the respondent, stood at K9,484,268.60 plus ‘interest, costs and all other charges due and owing to the bank.’ The respondent also sought an order of foreclosure on the mortgages and on order for the enforcement of the Guarantee/Suretyship signed by the second and third respondents. The appellant resisted the respondent’s claim in the lower court principally on grounds that the respondent undertook precepitate actions outside the provisions of the facility agreement that fettered the appellant’s ability to repay the loans as intended. Such action included the unilateral conversion of part of the K3,500,000 loan and the second loan J5 of K600,000 into overdraft facilities resulting into unagreed, extortionate interest being charged and debited to the appellant’s account. Further, that the respondent wrongly posted transactions on the appellant’s account including interest on a debit balance and the disbursement of the first loan in two tranches, both of which attracted overdraft facility charges. The appellant further alleged that the respondent never honoured its undertaking to regularise the issue of the unrequested overdraft. The learned trial judge heard the parties, advocates and considered the affidavit evidence. In a laconic judgment covered in barely three pages, the learned judge found for the respondent dismissing in effect, the appellant’s protestation to the respondents claim. He premised his decision on the alleged admission by the appellant that it had borrowed money from the respondent and that there was a balance outstanding. It is that three-paged judgment that has so befuddled the appellants that they launched the present appeals enlisting four grounds of appeal with a threat that more grounds will follow. J6 Under ground one of the appeal, it is contended that it was a misdirection on the part of the lower court to have avoided delving into the intricate details contained in the appellant’s affidavit in opposition to the respondent’s claim. The second ground faults the learned judge for failing to consider the arithmetic concerning the amounts paid by the appellant and those deductable from the sum outstanding so as to come up with a figure reflective of the true sum outstanding. In the third ground, it is contended that the judge should have rejected compound interest and penalty charges lumped on the appellant’s account before he pronounced himself on he sum he alleged was owing. In the final ground, the appellant has taken issue with the learned trial judge’s order that the judgment sum be paid within 120 days. This, according to the appellant, ignored the fact that the facilities still had up to 2020 to run. The learned counsel for the appellant filed heads of argument on 14th October, 2010 and what they called a List of Abstract Authorities on the same day. J7 Preliminary View; Ground one Merit. Without getting into the details it was impossible for the court to fully appreciate the contention of the appellant. Ground two Merit. The court should have considered what was paid and what remained to be paid. In other words there was need to make findings of fact. Ground three - Merit. Compound interest is allowable while penal is not - needed to clearly isolate this. Ground four No merit. The right to recall the loan effectively terminates the loan period.