THE Lusaka High Court has ordered the deputy Registrar to assess the sums claimed by DBZ in a suit against foreign affairs minister Joseph Malanji and others for non-payment of a loan facility.
High Court judge Kazembe Chenda ordered that the Deputy Registrar should assess the sums claimed by the Development Bank of Zambia to determine the history and composition of what amounts were recoverable by a financial service provider.
Justice Chenda said he could not find any conclusive evidence of the composition of the sum claimed against what the principal debt was at the time the loan became non-performing within statutory meaning.
He ordered that should the Registrar find that there is any penal component of the interest then that component shall be excluded from the computation.
In this matter, DBZ has sued Malanji, Royal Gibson Hotel Limited, Benson Malanji and Gibson Power System Limited as respondents in the Commercial Registry for non-payment of K5,890,466.74 million as interest owed to it as at August 25, 2019.
The bank contended that the money was owed to it by the hotel through a loan facility where stand No. 7742, and plot 1910, all in Kitwe, were pledged as security under legal mortgage and third party mortgage by the hotel and Malanji.
Malanji has been sued as guarantor and third party mortgagor while Benson and Gibson Power Systems Limited have been sued as guarantors.
DBZ is seeking an order for enforcement of the debenture over all the hotel’s assets and appointment of a receiver for the purpose of enforcing the said debenture, and delivery up of possession of the mortgaged properties by Royal Gibson Hotel and Malanji.
It also wanted foreclosure of Mortgaged properties, order to sell them and any relief the court may deem fit.
But Malanji had asked the Court to vacate its order of judgment set for November 26 and instead asking to be heard in the matter.
Malanji stated that the bank was responsible for the hotel’s failure to abide by the agreed payment plan since the entire amount of K3,800,000 was disbursed upon execution of the loan agreement.
He said that the hotel had to source for alternative funding from third parties to cover the gap caused by the delay on the part of the bank to ensure that its project proceeded in a timely fashion.
But judge Chenda said it would be speculative of him to determine whether the money was recoverable in view of the Consumer Protective provisions of section 109 and 110 of the Banking and Financial Services Act.
“In view of the first respondent’s default in its payment obligations as guaranteed by the respondents, the applicant is entitled to all of the remedies as prayed for, subject to the lapse of a reasonable grace period to be afforded for the equity of redemption before enforcement of the legal mortgage and third party mortgage,” Judge Chenda said.
The judge ordered that if the deputy registrar finds that the interest component of the sum claimed exceeds the principal amount owing when the facilities under the loan agreement became non-performing then the said interest shall accordingly, be capped at the extent of the principal debt as at NPL date.
He said should the inquiry instead reveal that the sums claimed fall within the permissible confines of section 109 and 110 of the Banking and Financial Services Act, they shall be upheld accordingly.
He directed that after inquiry, the sums awarded to the bank shall be paid by the hotel.
Judge Chenda ordered that the judgment sum shall bear interest at the agreed contractual rate under clause 6 of the facility agreement from August 22, 2019 until date of payment.
He also ordered that the hotel pays the bank the judgment sum and interest within 120 days from the date of award by the deputy registrar, failing which the applicant would be at liberty to enforce its right under the debenture and enforce the legal mortgage and third party mortgage and foreclosure…and sell the mortgaged properties.
Judge Chenda further ordered that should there be any unsatisfied balance of the judgment sum after fulfillment of the orders, the same shall be paid by Joseph Malanji, Benson Malanji and Gibson Power System Limited to the joint personal guarantee and corporate guarantee.
“Subject to the dictates of this judgment, the respondents shall also bear the agreed charges under clause 7 of the facility agreement and clauses 4 and 9 of the restructured facility agreement. Save for the costs of the inquiry by the deputy registrar of which each of the parties shall bear their own and the costs awarded prior to this judgment, which remain as is, the hotel shall pay the applicants costs of and occasioned by this action to be taxed in default agreement,” ordered judge Chenda.