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Monday, June 1, 2020

Court of Appeal Rules in Favour of Stanbic bank in Landmark Judgment

Economy Court of Appeal Rules in Favour of Stanbic bank in Landmark Judgment

Stanbic Bank Zambia Headquarters
Stanbic Bank Zambia Headquarters

The Court of Appeal has ruled in favour of Stanbic Bank Zambia in a long-running dispute with a defaulting borrower that sued the bank claiming K192.5 million in damages for loss of business as a result of being registered as a bad debtor with the Credit Reference Bureau.

In September 2006 Savenda won huge damages against Stanbic for wrongly reporting the firm to the Credit Bureau.

At the time Judge Justin Chashi, of the court’s commercial division, awarded damages to Savenda for losing significant contracts after being reported by Stanbic bank to the Credit Reference Bureau for defaulting on instalments.

Justice Chashi found the non-payments were the bank’s fault and made other findings that will affect relations between other businesses and their bankers.

In 2007, Savenda had arranged a Stanbic lease buy-back facility for a US$540,000 printing machine, with payment to be made via an overdraft facility.

Savenda said the balance on its loan facility did not reduce despite lease payments, and asked Stanbic to explain.

After hearing detailed financial evidence from both sides, Justice Chashi found the problem lay with a bank glitch that led to the account defaulting and then being classified delinquent.

In December 2016 the Court of appeal granted Stanbic Bank Zambia leave to appeal against the judgment that ordered the payment of K192.5 million to Savenda Management Services in damages after registering it as a bad debtor with the Credit Reference Bureau.

On Friday, the court overturned an earlier High Court judgment and ordered Savenda Management Services Limited to pay costs of the appeal, but awarded Savenda Management Services Limited nominal damages of K 5,000.

The case was seen as precedent impacting the amount of risk that banks are prepared to take when lending to customers and thus the amount of debt available to customers. It called into question an essential tenet of the banking industry’s development, under which banks are able to share information about the credit worthiness of customers. The system is a mainstay of banking systems throughout the developed world and was introduced in Zambia in 2006.

“Stanbic Bank Zambia commends the judiciary for ensuring that justice has been served. The judgment puts the banking industry back on track after a period of uncertainty, and with the recent Bank of Zambia reduction in base lending rates, borrowing is now becoming more affordable,” said Stanbic Acting Chief Executive Helen Lubamba, who urged customers who were having problems meeting loan repayments to approach the bank for help.

In a related case, in May 2013 an arbitral tribunal ruled that Savenda Management Services Limited must pay Stanbic US$1.36 million it was owed under a lease buy-back facility for a US$540,000 printing machine.

In August 2017 the bank also obtained a Supreme Court order for Savenda Management Services Limited to pay the arbitration amount and refused an application by Savenda to pay the amount in installments. The Supreme Court also ordered Savenda Management Services Limited to pay Stanbic costs incurred in the Supreme Court and the High Court.

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  1. Is this a case of a large coperate company bulldozing its way through our court systems which probably do not have the knowledge and skill in coperate affairs, to the disadvantage of a small business? Not sure who owns Savenda.If its a Zambian then I’m pissed at the judgement against them.If not-never mind ,next story!

  2. Someone dumb it down please..kaya nga ni bad reporting but im lost even though I know the gist is Stanbic lost then appealed then won.. Journalism inangu awe mwee.

  3. this ruling will make boisterous banks fakely list hard working zambians that trying hard to pay back loans they got from shylock local banks. GRZ should come up with clear policy on how one can be list, banks have personalised the listing on CRBas opposed to case now … you friend wont be listed if you are not you will be.
    Dont make a mistake of grabbing a woman from these poorly paid bank employees and have a loan with that bank… CRB will be on your door

  4. ‘Savenda is a forward looking and well established player in procurement & logistics solutions globally & has several International partners servicing the mines, Telecommunications, Energy, Agriculture, Automotive, Petro-chemical and Medical fields including government.’
    Chinese fronted by Africans and swindling African governments?

  5. I highly doubt Stanbic had a “Glitch” that stopped a loan from being repaid.. that’s the base function of any bank..

    More investigation has to be done into this. And if Savenda is corrupt they must be kept away from government contracts..

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