Mzuzu must pay Fincorp over E180 000

However, it could not claim the collection commission as part of the amount owed. This order was issued by Judge Nkululeko Hlophe at the High Court yesterday. This was an application in which FINCORP sought an award of Summary Judgment against the construction company. FINCORP was represented by attorney Zweli Jele and attorney Lloyd Mzizi represented the construction company.

An amount of E200 000 was loaned and advanced to Mzuzu on August 31, 2006. The agreement was reduced to writing. The money was designated as working capital for the company which is situated at Mankayane.

Mqondisi Nkumane, Alexinah Nkumane and Bertram Stewart were cited as defendants in the application. This was because they had signed suretyship agreements in favour of the company, confirming that in the event the company failed to pay the debt, they would then be liable to repay it. The loan was repayable within 48 months in monthly instalments and the interest rate was fixed at ‘Prime Plus 4.5 percent’, which was 16 per cent per annum at that time. Due to the failure of the company to repay the amount owed, FINCORP instituted this action against the company. In the application, FINCORP demanded the payment of E182 362.41 as at December 1, 2010, together with interest and an order of costs. The action was instituted on January 11, 2011 after the company failed to pay the instalments in June 2009.

Mzuzu Construction filed a notice of intention to defend. After the company had entered a notice of intention to defend, FINCORP then filed a Summary Judgment application contending that the notice had only been filed to delay the proceedings as the defendants did not have a defence to the claim. The defendants claimed that the agreement was of no force and effect as the interest claimed was fixed at 16 per cent which was above the interest rate contemplated by the Money Lending and Credit Financing Act of 1991 which demanded that the interest should not be fixed above eight per cent.The issue for determination by the court therefore was whether or not there was a reasonable possibility that an injustice may be done if the Summary Judgement was to be granted.

"Before dealing with the merits of the argument raised Vis a Vis (against) the Money Lending Act of 1991, I must make it clear that my reading of the first schedule to the loan agreement does not support what is contended by the Plaintiff to be the rate of interest chargeable. It does not in fact provide that the interest is 16 per cent as alleged (and for) this reason, I cannot personally refer this matter to the Supreme Court as I was urged to do," Judge Hlophe said. Justice Hlophe accordingly granted the summary judgment as prayed, which however excluded the payment of the collection commission.

　

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