IN THE HIGH COURT OF MALAWI
LILONGWE DISTRICT REGISTRY
CIVIL CAUSE NO. 731 OF 2003
BETWEEN
MRS. KHWAULE t/a SEDUTA BOUTIQUE PLAINTIFF
AND
G. MLOMBE ... DEFENDANT
Coram: Ligowe: Assistant Registar
Mapila : Counsel for the Plaintiff
Msiska Mrs.: Court Clerk
ORDER
The plaintiff in this matter commenced action against the defendant on the 3rd November, 2003 claiming the sum of K118 000.00 being the amount claimed and agreed compensation for the loss of business. Or in the alternative, the sum of K99 840.00 as agreed consideration plus interest thereon. Or in the further alternative, special and general damages for breach of agreement. The plaintiff further claims legal collection cost of K20 797.50 including surtax thereon. And costs of this action. A default judgment was entered on these claims. This is an order on assessment of interest pursuant to that judgment.
The facts of the case are as follows. In an oral agreement between the plaintiff and defendant the plaintiff supplied the defendant cosmetics and dresses for valuable consideration. It was agreed that the defendant will pay the plaintiff upon delivery. The plaintiff then delivered the goods to the defendants sometime in June, 2003 to the value of K99 840.00. The defendant then issued three cheques marked EXP2, EXP3 and EXP4 totaling to K99 840.00 the agreed price of the goods. These cheques were however dishonoured and marked refer to drawer.
When these cheques were dishonored the plaintiff approached the defendant on the issue. The defendant issued a post dated cheque of K118 000.00 marked EXP1 on 30th September, 2003 being the agreed compensation for loss of business. The defendant informed the plaintiff to source money from elsewhere with which to run her business, which money could be repaid upon cashing the fresh cheque when it became due.
The plaintiff duly borrowed the money and continued with her business. However, this fresh cheque aforementioned was also dishonored upon presentation when it had become due.
At this point, the court needs to determine, in addition to the Legal collection costs including surtax and costs of this action, which of the major alternative remedies prayed for should be granted to the plaintiff. It is on the basis of that claim that interest will be assessed. Having come this far I remind myself of Order 18 rule 8 which provides that interest must specifically pleaded.
Looking at the plaintiffs statement of claim, it is clear that interest was only pleaded on the claim for K99 840.00. Thus this court forms the opinion that the plaintiff be granted the second remedy sought.
The plaintiff is a business lady who deals in dresses and cosmetics. She has a Boutique where she trades as Seduta. As a business lady, she would want her items to sell as fast as possible in order to maximize profit. It would definitely be shameful on the defendant upon being trusted so much as to the payment of the money, to disappoint the plaintiff in such a manner. Four times the cheques bounced. Where then did the defendant think the plaintiff would collect the money? The defendant was not an honest person. Moreover, as a Member of Parliament I could not see why she behaved in such a manner.
In Gwembere Vs. Malawi Railways Limited 9 MLR 369 it was held that interest should be awarded where a party to whom money was owed was driven to legal proceedings to recover it. This is exactly the scenario which this matter falls in.
The question now remains what kind of interest then should be applied and at what rate? Wallesteinner vs. Moir (NO2) (1975) QB 373 emphasized on adequate compensation where one holds money as a fiduciary. This court thinks a compound interest on the principal sum will be adequate. The transaction after all was commercial in nature. The law is clear as to the rate to be applied. Zgambo vs. Kasungu Flue Cured Tobacco Authority 12 MLR 311 held that in the absence of any rate being specified in the contract between the parties, the appropriate rate to use is the minimum lending rate plus 1%.
The current bank lending rate at National Bank is 27% per annum. This rate plus 1% becomes 28%. Interest therefore will be calculated at a compound interest rate of 28% from June, 2003 to August, 2005. Hence the interest found is K71 371.50.
It is therefore ordered that the defendant do pay K99 840.00 being the principal sum owed plus interest of K71 371.50. It is further ordered that the defendant pay all legal collection costs of K20 797.50 including surtax and costs of this action.
Made in Chambers this of September 2005.
T.R. Ligowe
ASSISTANT REGISTRAR