CIVIL CAUSE NO. 3774 OF 2001
FINANCE CORPORATION OF MALAWI................DEFENDANT
CORAM: THE HON. MR JUSTICE F.E. KAPANDA
On the same day the Plaintiff instituted the said proceedings, against the Defendant, the court granted him an ex-parte interlocutory injunction. The court ordered that the injunction was to be valid for 14 days within which the claimant was to cause to be heard an inter-partes summons for an interlocutory injunction. Moreover, the injunction was to last for 14 days or until a further order was made.
This order of injunction, of 24th December 2001, is now the subject of the present applications. The Defendant wants the injunction discharged while the Plaintiff would like the injunction to continue until the determination of the action that was commenced by him.
Facts of the Case
“Our Ref: RIH/2001
Mr R I Hamdani
OUTSTANDING DEBT-K4,495,185.62 AS AT 9.11.2001
We wish to reiterate that full liquidation of the debt must be achieved by 31st December 2001 as per our agreement contained on our letter dated 3rd September 2001 which please acknowledge and return to us by Thursday 15th November 2001.
In addition arrange to regularize the position by paying the sum of K2,585,935.44 by 14th November 2001 failing which we shall reinstate legal action with specific instructions to realise our security.
Please note that when this becomes necessary, no further negotiations shall be entertained as you will have reneged on your undertaking.
We trust that you accord the matter the seriousness it deserves.
The above are, in a nutshell, the salient facts of this case as disclosed by the affidavits that were filed with the court. Further facts will appear later in this ruling. I will now move on to set out the issue(s) for determination in this matter.
Issues for Determination
As I see it, the main question that must be answered in this application is whether or not the order of an interlocutory injunction, which this court made on 24th December 2001, should be vacated. There are of course other attendant issues which will also be dealt with when I am considering the substantive issue set out above.
Before embarking on the exercise of adjudicating upon the said issues let me point out that both Counsel addressed the court at length during oral submissions in support of their respective positions regarding the applications they have made. I am so indebted to them for their instructive arguments of the law they have invited me to apply to this matter. It will not, however, be possible to refer to each and every argument put forward by both Counsel but I will make reference to some of the arguments that I have found particularly relevant to the issues arising in the applications herein.
Consideration of the Issues
default and notice demand
It is an undeniable fact that the Plaintiff defaulted on the repayment of the loan facility granted to him by the Defendant. Actually, he has defaulted twice viz prior to Notice of Demand of 17th August 2001 and immediately before the Notice of Demand of 9th November 2001. Moreover, the Plaintiff has failed to honour an undertaking which he made regarding the repayment of the loan by monthly instalments of MK1,100,000.00 effective 29th of September 2001.
In view of the defaults mentioned above there was nothing wrong in the
Defendant issuing a notice that it wanted to realise its security over
the loan. The Plaintiff has submitted that the notice of 9th November
2001 was premature because of the so called agreement of 2nd February 2001.
Consequently, it was further argued by Counsel that the Plaintiff was right
in applying for an interim injunction. It was the further argument
of the Plaintiff, through his Counsel, that the demand was not in keeping
with the provisions of Section 68 of the Registered Land Act (Cap 58:01)
of the Laws of Malawi in that the notice given was for a period of less
than three (3) months. I do not agree. The Plaintiff and the Defendant
agreed to exclude the applicability of the provisions of Section
68 of the said Registered Land Act to the Charge that was created in respect
of the Plaintiff’s property. It is so clear that, in terms of Clause
4.D of the Charge (exhibit JKI), the parties unequivocally agreed that
the restriction in respect of the exercise of power of sale will not apply
to the charge. The relevant part of said Clause 4.O, of the Charge
annexed to the affidavit of Mr Jimmy Kayuni, is as follows:-
This Clause clearly shows that the Plaintiff’s contention that the Defendant prematurely wanted to realise security is misplaced. It was expressly agreed by the parties that the power of sale could be exercised at anytime when money owing under the charge has become payable. I wish to point out that the alleged agreement of 2nd February 2001 did not, and could not, change or undo what the parties agreed in the said Clause 4.O of the charge viz that the debt would be payable on demand and that there would be no restriction as to the power of sale. This means that there was no need for the said three (3) months to expire before the Defendant could proceed to sale the house in order to realise its security.
Variation of agreement
The injunction should be, and is hereby, discharged because its continuation will amount to allowing a secured debt being turned into an unsecured debt because the Plaintiff essentially wants to be allowed to repay the debt within a reasonable time by making reasonable payments. This is not what the Plaintiff agreed with the Defendant when the former was given the credit facility by the latter. The Plaintiff wants to enter into another agreement with the Defendant but unfortunately there is no consideration for such agreement. The debt must remain a secured one as provided for in the charge.
The Plaintiff shall bear the costs of, and occasioned by, the applications herein. It is so ordered.
Made in Chambers this 22nd day of March 2002 at the Principal Registry,