The
following facts are common cause. On 22 January 2010 the parties
entered into an agreement in terms of which the applicant lent the
sum of US$9,500= to the respondent. It was an express term of the
agreement that payment would be made within seven days from the date
of lending. The respondent failed to repay the lent amount within the
agreed period. He then requested for an extension of time and it was
agreed that he would pay back the full amount on or by 30 June 2010.
The respondent signed an acknowledgement of debt in which he
acknowledged owing the respondent the sum of US$9,500= and also
promised to pay the amount owing by or on 30 June 2010.
The
following is also stated on the acknowledgment of debt:
“I
agree that if I fail, for any reason, to pay this amount by the
agreed date an interest of 25% will be charged.
Legal
action will be taken if the money plus interest is not paid within 24
hours from the above agreed date of payment.
I
hereby undertake and agree to pay the 25% interest, collection
charges as well as costs of suit for the legal practitioner and any
other costs incurred by CHIEDZA CHIKOMO if legal action should be
taken against me for the recovery of this debt or any other sums due
in terms of this acknowledgment of debt.”
The
respondent did not make the payment by or on 30 June 2010. The
applicants' legal practitioners wrote and served the respondent
with a letter of demand. The respondent did not respond. On 16 July
2010, the applicant, through his legal practitioners, caused summons
to be issued against the respondent claiming payment of the $9,500=,
interest thereon of 25% of the capital debt, 10% collection
commission and legal costs at the legal practitioner and client
scale.
The
respondent was served with the summons and he entered appearance to
defend through his legal practitioners. The applicant has now made
this application for summary judgment on the basis that the
respondent has no defence to the claim for the capital debt of
$9,500=.
The
respondent opposes the application on the grounds that although he is
indebted to the applicant for the capital debt of $9,500=, the
applicant is claiming usurious interest and that the applicant is not
a lending institution or a registered money lender in terms of the
Moneylending and Rates of Interest Act [Chapter
14:14].
Furthermore, the claim for collection commission is not within the
ambit of the Law Society tariffs and has no legal basis. The
respondent also contends that as the agreement between the parties is
consequently illegal, it would be equitable for costs to be on an
ordinary scale.
In
Kingstons
Limited v L D Innerson (Pvt) Ltd
SC08-06 ZIYAMBI JA stated:
“Not
every defence raised by the defendant will succeed in defeating the
plaintiff's claim for summary judgment. Thus, what the defendant
must do is to raise a bona
fide
defence - a plausible case with sufficient clarity and completeness
to enable the court to determine whether the affidavit discloses a
bona
fide
defence. He must allege facts which, if established, would entitle
him to succeed.”
In
casu,
the respondent does not deny liability in respect of the principal
debt in the sum of US$9,500=. His opposition to the application is
principally on the issues of interest, collection charges and costs.
These issues are all dealt with in the acknowledgment of debt.
Section
8 of the Money
Lending and Rates of Interest Act [Chapter
14:14]
stipulates as follows:
“8.
Maximum rates of interest
(1)
No lender shall stipulate for, demand, or receive from the borrower
interest at a rate greater than the prescribed rate of interest.”
The
respondent seeks to find refuge in this provision in his quest to
defeat the application. However, section 4 of the Prescribed Rates of
Interest Act [Chapter
8:10]
provides as follows:
“If
a debt bears interest and the rate at which interest is to be
calculated is not governed
by any other law or
by an agreement
or trade custom or in any other manner, such interest shall be
calculated at the prescribed rate as at the date on which such
interest begins to run, unless a court of law, on the ground of
special circumstances relating to that debt, orders otherwise.”…,.
In
casu,
the rate at which interest is to be calculated is governed by
agreement, as reflected in the acknowledgment of debt. The respondent
cannot, therefore, in my view, find any escape from the applicants'
claim for 25% interest as this is based on or governed by the
agreement between the parties. Furthermore, by virtue of the
provisions of section 4 of the Prescribed Rates of Interest Act
[Chapter
8:10]
the acknowledgment of debt cannot, as counsel for the applicant
correctly submitted, be said to be tainted with illegality. The
applicant's claim for 25% interest is thus justified and the
respondent has no valid or bona
fide
defence against it.
The
other claims contested by the respondent in
casu
are the claims for collection commission and costs on a legal
practitioner and client scale.
The
applicant's legal practitioner referred the court to case
authorities including Tselentis
House (Pvt) Ltd v Southern African P&P House (Pvt) Ltd
1995 (1) ZLR 56 (H) and SEDCO
v Guvheya
1994 (2) ZLR 311 (H) in support of the proposition that where a party
agrees to pay collection commission and legal costs, as in this case,
the court should grant an order for the same.
In
Scotfin
Ltd v Ngomahuru (Pvt) Ltd
1997 (2) ZLR 567 SMITH J and GILLESPIE J stated…,:
“As
is well known, costs are awarded at this higher rate only in
exceptional circumstances. They may, however, be awarded when there
is agreement to such an effect. The purpose of such agreement, quite
obviously, is the same as the intention behind an agreement that the
debtor will be liable to reimburse his creditor collection
commission. It is to ensure that the creditor does not suffer the
inevitable loss which will be incurred as a result of the taxation of
a party and party bill, even though he recovers his costs.”
They
proceed at 584 F-G:
“The
appropriate form of order for such relief moved in the High Court is
accordingly the following, where there is an agreement between the
creditor and debtor that collection commission and costs on the
higher scale may be recovered:
'Judgment
for the plaintiff in the sum of $x together with interest at the
prescribed rate, presently y% per annum from…, until the amount is
paid in full and collection commission thereon calculated in
accordance with by-law 70 of the Law Society of Zimbabwe by-Laws,
1982, and costs on the legal practitioner and client scale to the
extent such costs are permitted in proviso (iii) to by-law 70(2).'
Where
there is no agreement…,.”
In
the acknowledgment of debt in casu
the
respondent agreed, inter
alia,
that should legal action be taken against him for the recovery of the
debt, he would pay “collection charges as well as costs of suit for
the legal practitioner and any other costs incurred” by the
applicant.
There
is no agreement to pay costs on the legal practitioner and client
scale. The statement merely states “costs of suit for the legal
practitioner”. I am not persuaded it is necessary to exercise
discretion and award costs on the legal practitioner and client scale
as urged by the applicants' legal practitioner. Costs will be
awarded on the ordinary scale.
The
respondent also agreed to pay collection charges. I will be guided by
the formulation in Scotfin
Ltd v Ngomahuru (Pvt) Ltd
1997 (2) ZLR 567…, in granting the relief sought by the applicant
in this respect.
The
respondent has failed to raise a
bona
fide
defence to the applicant's claim. He has not alleged any facts
which, if established, would entitle him to succeed. His lack of bona
fides
is also shown by his non- payment of even the capital debt only, for
which he does not dispute liability.
In
the circumstances, it appears to me that there is no impediment to
the granting of the order sought by the applicant with the
modifications indicated above. It is therefore ordered as follows:
IT
IS ORDERED:
1.
That the respondent shall pay to the applicant the sum of US$9,500=
together with 25% interest therein; collection commission therein
calculated in accordance with by-law 70 of the Law Society of
Zimbabwe By-Laws, 1982 and costs of suit.
