Pulse Financial Services Limited (Suing as Entrepreneurs Financial Centre) v Moyo John (2023/HPC/0706) [2024] ZMHC 205 (6 February 2024)

IN THE HIGH COURT FOR ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) 2023/HPC/0706 BETWEEN: IN THE MATTER OF: • IN THE MATTER OF: PROPERTIES COMPRISED IN A THIRD FURTHER CHARGE RELATING TO HOUSE (OR SHOP) No. 102 IN BLOCK C AREA NABVUTIKA CHIPATA, EASTERN PROVINCE, ZAMBIA HAVING OCCUPANCY LICENCE No . 00014. IMPROVEMENT ORDER 30 RULE 14 OF THE HIGH COURT RULES CHAPTER 27 OF THE LAWS OF ZAMBIA AS READ TOGETHER WITH ORDER 88 OF THE RULES OF THE SUPREME COURT OF ENGLAND 1999 EDITION. IN THE :MATTER OF: A MORTGAGE ACTION. BETWEEN: PULSE FINANCIAL SERVICES LIMI a s En tre;,r en eurs Financial Cen tre) AND MOYO JOHN • 1 ~--=------, 0 i FEB 2024 MMERCIAL REG I APPLICANT RESPONDENT Coram: Honourable Lady Justice Chilombo Bridget Maka For the Applicant: Mrs. T. Chongo-Mwamba - In House Counsel. For the Respondent: No Appearance. JUDGMENT Legislation Referred to: 1. The High Court Rules, Chapter 27 of the Laws of Zambia. 2. The Rules of the Supreme Court of England 1999 Edition (White Book). 3. The Banking and Financial Services Act No. 7 of 2017. Cases Referred to: 1. Kanjala Hills Lodge Limited and Veronica Namakau Jayetileke vs. Stanbic Bank Zambia Limited (2012) Vol. 2, 285. 2. 11. S. Brian Musonda (Receiver of First Merchant Bank Zambia Limited (In Receivership) vs. Hyper Food Products Limited, Tony's Hy permarket Limited and Creation One Trading Zambia Limited • ( 1999) Z. R, 124 (SC). 3. Khalid Mohammed vs. Attorney General (1982) Z. R, 49. (S. C). 4 . Santley vs. Wilde ( 1899) 2 CH, 474. • Other Works Referred to: 1. Land Law Text and Materials 3rd Edition. 2. Megarry's Manual of the Law of Real Property 6 t h Edition. 3. Phipson on Evidence 17th Edition. 4. Halsbury's Laws of England, 5 th Edition Vol. 77 (2010) . 1. Introduction. 1.1. The Applicant 1s a financial service provid er regula ted under the Bankin g and Financial Services Act No . 7 of 2 017 . The Responden t is a Zambian n ational who obtained several loans from th e Applicant . 1.2. On 10 th October, 2 023 th e Applicant commen ced this action against the Respondent. The su it was com menced J2 • • by way of Originating Su mmons su pported by affidavit in support as well as a list of au th orities and skeleton arguments. 1.3. The Applicant is claiming the following reliefs: - i. Paym ent of all monies owed by the Respondent to the Applicant which as at 9 th October stood at ZMW333,659.27 plus contractual interest thereon and other charges due to the Applicant by virtue of a loan agreement dated 30th November, 2022 and secured by a Third Party Further Charge over house No. 102 in Block C Nabvutika Improvement Area, Chipata in the Eastern Province of the Republic of Zambia h aving occupancy Licence No. 00014 and further secured by movable collateral assets. ii. An Or der for foreclosure, delivery and possession o f House (or shop) No. 102 in Block C Nabvutika Improvement Area, Chipata in the Eastern Province of the Republic of Zambia having Occupancy Licence No. 00014 being the mortgaged property; and thereafter the Applicant exer cises its power of sale. iii. An Order for delivery, possession and sale of the m oveab le collateral assets namely deep freezer(Defy). 2 plate stove (Pineware) Television J3 set (Samsung) 14 inch Television set (President), Home Theatre (Superman); DSTV Decoder, Go TV Decoder, 2 piece Black Sofas, Television Stand and Black Coffee Table. iv. Further or other relief the Court may deem fit. v. Interest and costs. 2. Applicant's Affidavit Evidence. • 2.1. The affidavit was sworn by Kelvin Mayonga, the Chief Credit Officer in the Applicant company. 2.2. Mr. Kelvin Mayonga deposed th at the Respondent was advanced a sum ZMW151,000.00 on 30th September, 2020 through a Loan Facility (1 st Loan Facility). That sometime in August, 2021, the Respondent requested for a top up on his loan in the sum of ZMW200,000 .00 and a 2 nd Loan Facility was created whilst the first loan facility was closed off. • 2.3. That following another loan top up request from the Respondent, the 2 nd Loan Facility was closed and a sum of ZMW250,000 .00 was disbursed to the Respondent of 28th May, 2022 under a 3 rd Loan Facility. 2.4. It was further averred that the 3 rd Loan Facility was equally closed upon the Respondent's request for another loan top up amounting to ZMW 360,000.00 which was disbursed to him under a 4 th Loan Facility d ated 30th November, 2022. The 4 th Loan Facility carried interest at the rate of J4 • • 4.58% per month and it was to be repaid by the 5 th December, 2024 translating to 24 monthly instalments. Produced and marked "KM2a" "KM2b" and "KM2c" were ' the 4 th Loan Application Form, the 4 t h Loan Agreement and the Respondent's entire Loan Statement. 2.5. That the 4 th Loan Facility was secured by a Third Further Charge over house (or shop) No. 102 in Block C Nabvutika Improvement Area, Chipata in the Eastern Province of the Republic of Zambia (mortgaged property) belonging to the Respondent. The further charge was duly registered at the Chipata City Council on 12th December, 2022. Produced and marked "KM3a", "KM3b" and "KM3c" were copies of the Land Ownership Card, Third Further Charge and Lodgment Schedule. 2 .6. In addition to the Third Further Charge, the 4 th Loan Facility was secured by household assets as collateral comprising of a Defy Deep Freezer, a Pineware 2 plate stove, a Samsung Television Set, a 14 inch President Television Set, a Superman Home Theatre, DSTV and Go TV Decoders, a Black 2 piece Sofa, a Television Stand and a Black Coffee Table. 2.7. It was further averred that the Respondent has been in loan repayment arrears since 5 th August, 2023. As a result of the Respondent's default in repayment, the Applicant issued a Demand Notice which was produced as "KM4". However, that the Respondent has failed or refused to JS • • repay the outstanding sums due on the loan and is therefore truly and justly indebted to the Applicant. A copy of the Respondent's Payment Schedule was produced and marked "KM5". 2 .8. That as at 9 th October, 2023, the Respondent was owing a total of ZMW333,659.29 comprising of a principal sum of ZMW293,659 .67 and interest amounting to ZMW39,78 1.60. Copies of the Respondent's Account Statement and Principle plus interest balance were produced and marked "KM6a" and "KM6b". 2.9. That it is logical, fair and just that the Applicant recovers from the Respondent the owed sums plus contractual interest together with costs. In the alternative, that the Applicant exercises its legal and contractual rights which include foreclosure, possession and sale of the mortgaged property. 3. Applicant's Skeleton Arguments . 3.1. The Applicant's action is anchored on Order 30 Rule 14 of t he High Court Rules and Order 88 of the Rules of t h e Supre m e Court of England 1999 Edition which were quoted. 3.2. It was submitted that the creation of a mortgage is accompanied by a creation of remedies. The Learned authors of Land Law Text and Materials 3 rd Edition were quoted to summarize the said remedies as follows: - J6 • • "In addition to the personal remedy against the mortgagor for bre ach of the personal covenant to repay the loan, the mortgagee has a number of remedies against the mortgaged land. Foreclosure and sale are directed primarily at recovery of t h e loan a nd termination of the mortgage transaction ... " 3.3. The Applicant also relied on the case of Kanjala Hills Lodge Limited and Veronica Namakau Jayetileke vs. Stanbic Bank Zambia Limited'11 in which the authors of Megarry's Manual of the Law of Real Property 6 t h Edition was cited to posit th e mortgagee's right to foreclosure when ther e is a breach of a condition. 3 4. It was further submitted that the Mortgagee's rights are cumulative and that the mortgagee is at liberty to pursue any of the remedies in an effort to enforce payment. The case of S Brian Musonda (Receiver of First Merchant Bank o f Zambia Limited (In Receivership) vs. Hyper Foods Produ cts and Others'21 was cited to support this submission . 3 .5. The Applicant submitted that the transactions it entered into with the Respondent resulted in the creation of a legal mortgage. It was contended that the Respondent's default in its loan repayment obligations constitutes a b reach of a condition that was to be complied with in order to keep the right of redemption alive. Th at it is for this reason that the Applicant is pursuing the remedies available to it as mortgagee in this action. J7 3.6 . The Applicant prayed that this Court grants it the reliefs endorsed on the Originating Summons with costs. 4. Respondent's Affidavit Evidence and Skeleton Arguments. 4.1. By Order of this Court, the Respondent was served the Originating process vide substituted service on 15th and 16th January, 2024 through advertisement in the Zambia Daily Mail. 4.2. The Respondent did not enter appearance, neither did he file the affidavit and skeleton arguments in opposition to the Applicant's action. 5 . Hearing of Application. 5.1. The Applicant's Originating application was heard on the 26th January, 2024. 5.2. Counsel for the Applicant was 1n attendance while the Respondent was absent. 5.3. Satisfied that the Respondent was served the Notice of Hearing, I proceeded to hear the matter pursuant to the provisions of Order 35 Rule 3 of the High Court Rules. 5.4. Mrs. Mwamba intimated that the Applicant was entirely relying on the Originating Summons, affidavit in support and the list and skeleton arguments filed into Court on 10th October, 2023. • • J8 6. Consideration and Determination. 6.1. I have examined and considered the Applicant's originating process together with the accompanymg documents. The Applicant's mortgage action is premised on the provisions of Order 30 Rule 14 of the High Court Rules which provides as follows:- • • "Any mortgagee or mortgagor, whether legal or equitable or any person entitled to or having property subject to a legal or equitable charge, or any person having the right to foreclosure or redeem any mortgage, whether legal or equitable, may take out as of course an originating summons, returnable in the chambers of a Judge for such relief of the nature or kind following as may by the summons be specified, and as the circumstances of the case may require; that is to say- i. ii. Payment of moneys secured by the mortgage or charge, Sale; iii. Foreclosure: iv. Delivery of possession (whether before or after foreclosure) to the mortgagee or person entitled to the charge by the mortgagor or person having the property subject to the charge or by any other person in, or alleged to be in possession of the property; v. Redemption; vi. Reconveyance; vii. Delivery of possession by the mortgagee." J9 6.2. Order 88 of the Rules of the Supreme Court of England 1999 Edition was equally relied on for the within action. It provides that:- "This Order applies to any action (whether begun by writ or originating summons) by a mortgagee or mortgagor or by any person having the right to foreclose or redeem any mortgage, being an action in which there is a claim for any of the following reliefs, namely - (a)payment of moneys secured by the mortgage, (b )sale of the mortgaged property, (c)foreclosure, (d)delivery of possession (whether before or after foreclosure or without foreclosure) to the mortgagee by the mortgagor or by any other person who is or is alleged to be in possession of the property, (e)redemption, (f)reconveyance of the property or its release from the security, (g)delivery of possession by the mortgagee." 6.3. It is common cause that th e Respondent did not oppose the Applicant's action through an affidavit in opposition, therefore the Respondent has not denied the Applicant's claims. 6.4. The foregoing notwithstanding, the Applicant still bears the burden of proving its case on a balance of probabilities. The authors of Phipson on Evidence 17th Edition at page 151 wrote as follows :- no • "So far as the persuasive burden is concerned, the burden of proof lies upon the party who substantially asserts the affirmative of the issue. If, when all the evidence is adduced by all parties, the party who has this burden has not discharged it , t he de c isio n m ust be against him. It is an ancient rule founded on conside rations of good sense and should not be disputed from withou t strong re ason." • 6.5. The above legal principle was equally pronounced by the Supreme Court in the case of Khalid Mohammed vs. Attorney Generail3l wherein it was held inter alia that:- • "A plaintiff canno t aut omatically su cceed wheneve r a de fence has failed; h e must prove his case." 6.6. According to the Loan Application form marked "KM2a", the Respondent applied for a loan in the sum of ZMW360,000.00 from the Applicant on 19th November, 2022. The Respondent undertook to repay the loan sum in 24 monthly instalments and pledged household goods as well as a house as security for the loan. 6.7. On 30th November, 2022, the Applicant and Respondent executed a Loan Agreemen t (KM2b) in which it was agreed that the Respondent would be advanced a sum of ZMW360,000.00. The loan amount was to carry interest at the rate of 4.58% per month or 55% per annum. It was also agreed that the loan would be repaid by the Jll • • Respondent in 24.57 months. It was further agreed that any delay in repayments would constitute default which would entitle the Applicant to immediate payment of all sums due. On 30th November, 2022, the Respondent's account was credited with a sum of ZMW360,000.00. 6.8. The loan was secured by home appliances valu ed at ZMW6,500.00 and a residential house (or mortgaged property) valu ed at ZMW429,000.00 as evidenced in the Loan Agreement and a registered Third Further Charge marked "KM3b" as well as an entry on the Occupancy Licence relating to House (or Shop) No. 102 in Block C, Nabvutika Improvement Area in the name of the Respondent marked "KM3a". 6.9. The foregoing facts are indicative of a legal mortgage. This view is in line with Halsbury's Laws of England, 5 th Edition definition of a mortgage as follows:- "A mortgage is a disposition of property as security for a debt . It may be effected by a demise or sub-demise of land, by a transfer of a chattel, by an assignment of a chose or thing in action, by a charge on any interest in real or personal property or by an agreement to create a charge, for securing money or money's worth, the security being redeemable on repayment or discharge of the debt or other obligation. Generally, whenever a disposition of an estate or interest is originally intended as a security for money, whether this intention appears from the deed itself or from any other instrument or from oral evidence, it is considered as a mortgage and redeemable." J12 • • 6.10. In the case of Santley vs. Wildel4 l a mortgage was explained in the following terms: - "A mortgage is a conveyance of land or an assignment of chattels as a security for the payment of a debt or the discharge of some other obligation for which it is given." 6.11. Having considered the evidence and facts on record, I am satisfied that a legal mortgage was created between the parties herein, which the Applicant now seeks to enforce. 6.12. As earlier stated, the Respondent was obliged to repay the loan advanced plus interest within 24 monthly instalments which were to expire on 5 th December, 2024. However, it was also agreed that failure to pay any instalment would constitute default. The consequences of default were stipulated in the Loan Agreement under clause 7.6.1. as follows:- "Recalling of the entire loan amount, immediate seizure of the funded asset, seizure of the collateral assets, and/ or legal proceedings, the costs of which shall be met in full by the borrower. The Lender shall be entitled to obtain immediate payment of all outstanding debt on the loan evidenced by the Loan repayment schedule and any further documentation of the Lender, immediately due and payable, without further notice, and regardless of the date of maturity of the entire loan." J13 • • 6.13. As per the Loan Application Form , the Respondent undertook to repay a sum of ZMW25,034.00 monthly towards the loan. However, according to the Accoun t Statements marked "KM6a" and "KM6b" the Respondent defaulted in h is monthly payment in August, 2023. The Applicant issued a Dem and Notice to the Respon dent dated 9 th August, 2023. On 12th September, the Respondent made a payment in the sum of ZMW550.00 only, an amount way below the agreed instalment sum. This prompted the Applicant to invoke the prov1s10ns under clause 7 .6.1 of the Loan Agreement. 6.14. Evidently, the Respondent defaulted 1n his loan repayments and is therefore in breach of the Loan Agreement. It therefore follows that the Applicant as mortgagee gained the right to pu rsue all the available remedies. This position was restated in the case of Kanjala Hills Lodge Limited vs. Stanbic Bank Zambia Limited'11 cited by the Applicant, in which it was held that:- "The Appellants h aving defaulted in their repayment obligation cannot hide beh ind the right of re de mption. This v iew is buttresse d in Atkins Court Forms Vol. 28 where the learned authors have stated at page 8 that: 'When the mortgagor defaults the mort gagee is entitled to pursue all his remedies c o n c urrently'." J14 • • 6.15. Order 30 Rule 14 quoted earlier outlines the var10us remedies available to a mortgagee which remedies can be pursued concurrently. These remedies were also pronounced by the Supreme Court in the case of S. Brian Musonda (Receiver of First Merchant Bank Zambia Limited (In Receivership) vs. Hyper Food Products Limited, Tony's Hypermarket Limited And Creation One Trading (Z) Limited'2 ' as follows:- "The Appellant commenced a typical mortgage action brought by a mortgagee. He asked for the payment of the money secured by the equitable mortgage, foreclosure, sale, delivery up of possession and further or other relief deemed appropriate by the Court. The mortgagee's remedies are truly cumulative leaving aside the fact that an equitable mortgagee's remedies are somewhat more restricted than those of a legal mortgage, we have quoted the terms of the Consent Order in order to underline the fact that the mortgagee's remedies are cumulative." 6.16. The Applicant has proved on a balance of probabilities that it availed loan facilities to the Respondent. Of relevance to the within proceedings is the loan facility of November , 2022 which was secured by a legal mortgage relating to House (or Shop) No. 102, Nabvutika Improvement Area situate at Chipata in the Eastern Province of the Republic of Zambia. Further security for the facility advanced were JlS • • household assets as endorsed on the Originating Summons. 6.17. It is evident that there was default on the part of the Respondents. Consequently, the Applicant is entitled to the reliefs being sought. 7. Conclusion and Orders. 7 .1. On account of the legal mortgage that was created between the parties, the Applicant is entitled to payment of the money that was obtained by the Respondent through the Loan Facility dated 30th November, 2022 together with the contractual interest. In default of payment, the foreclosure of the property that was pledged as security. 7.2. I therefore enter Judgment in favour of the Applicant against the Respondent for the payment of ZMW333.659.27 together with contractual interest due thereon to date. 7.3. The Respondent is hereby ordered to pay the Judgment sum together with the stated contractual interest within 120 days from the date hereof. 7.4. In the event of default, the Applicant shall be at liberty to foreclose on and sale the mortgaged property namely House (or Shop) No. 102, Nabvutika Improvement Area, Chipata. 7 .5. The Respondent shall deliver vacant possess10n of the mortgaged property to the Applicant. J16 7.6. I award costs to the Applicant to taxed 1n default of agreement. Delivered at Lusaka this 6 th day of February, 2023 . • • • • • • • • • • • • • • • • • • ~♦-• • • • • • • • • • Chilombo Bridget Maka HIGH COURT JUDGE • • J17