Facts: The appellant sought a loan from New Future Financial Company Limited, the 1st respondent, using her late husband’s property as collateral. The agreement was structured as a contract of sale with a buy-back clause, and when the appellant later defaulted, the 2nd respondent was registered as the new owner of the property. The appellant challenged the transaction, arguing it was a loan and that the property transfer was fraudulent. The High Court found in her favour, but the Court of Appeal overturned the decision, leading to the appeal before the Supreme Court.
Issues:
whether the appellant had the authority to enter into the contract.
whether the appellant had the power to pledge the property as collateral.
Reasoning: The Supreme Court found that the Local Court lacked jurisdiction to grant letters of administration for an estate of this value, making the appellant’s authority to pledge or sell the property invalid. Examining the contract and supporting evidence, the court determined that the transaction was a loan rather than a sale. The 1st respondent’s demand for US$67,800 was unfounded, as the appellant had only received ZMW 300,000. The court also ruled that the conveyancing process was flawed due to the use of an expired state’s consent.
Holding/Decision: The Supreme Court found that the terms of the transaction and the evidence on record indicated that the contract was a loan agreement and not a contract of sale. It set aside the Court of Appeal’s judgment, nullified the assignment of the property, and ordered the cancellation of the certificate of title issued to the 2nd respondent. Ownership was reverted to the deceased’s estate, and the appellant was held liable for repaying the ZMW 300,000 loan with interest at the bank lending rate.
Summary Author
Chanda Mwape (SAIPAR)