|
Banking –
loans - Company limited by
guarantee - Rate of interest –
Guarantors - loan are harsh,
excessive and unconscionable -
Friendly assistance - Whether
or not the plaintiff is a money-
Whether or not the plaintiff
charges interest without being
in possession of moneylender’s
license. - whether or not the
transaction was money lending
one – Whether or not the
transaction was “illegal and
unenforceable in terms of the
Money lenders Ordinance, Cap 176
- Leander Loans Recovery
Ordinance, Cap 175 (1951 Rev
HEADNOTES
The plaintiff
is an association of which the
PW1 is the president. According
to the PW1, the association was
formed with the aim of sourcing
loans for its members because
the members found it difficult
to source loans for their
businesses The association
obtained a loan of three billion
old Cedis from the Ghana
Commercial Bank for use by its
members. The first defendant
applied for and was given a loan
which was guaranteed by the
second, third and fourth
defendants. The loan was to have
been paid to the bank within a
period of 52 weeks and it
attracted interest of 29 per
cent per annum. The plaintiff
did not state the exact rate of
interest attracted by the loan
to the first defendant. The 1st
defendant was to have repaid her
loan of three hundred million
Cedis at the rate of nine
million Cedis per week but
within the same 52 weeks. At the
rate of nine million Cedis per
week, the 1st
defendant would have paid four
hundred and sixty eight million
Cedis within the 52 weeks. The 1st
defendant paid the weekly nine
million Cedis for 21 weeks,
after which she stopped or
failed to pay any more money to
the plaintiff. The plaintiff
therefore took action against
her and the other defendants in
their capacities as guarantors
for the recovery of 279 million
Cedis which she alleged was the
balance owed on the loan. That
transaction between the
plaintiff and the defendants was
evidenced by exhibit A. The
parties do not dispute that by
the agreement on the facility
given to the first defendant,
she was to have paid
GH¢46,800.00 from the
GH¢30,000.00 loaned to her. The
difference was GH¢16,800.00. By
simple arithmetical
calculation, the difference of
GH¢16.800.00 on the GH¢30,000.00
amounted to 52 per cent. That
included the 29 per cent charged
by the bank. In other words, the
Association charged 52 per cent
for lending the GH¢30,000.00 to
the first defendant. If the 29
per cent were to be deducted
from the 52 per cent, the
plaintiff would have charged 23
per cent as interest on the
amount lent to the first
defendant, the defendants
contended that “the terms,
interest and other charges
levied on the said
loan are
harsh, excessive and
unconscionable in terms of
the Loans
Recovery Ordinance, Cap 175(1951
Rev.).” In further answer to
the claim, the defendants
averred that
the
transaction was “illegal and
unenforceable in terms of the
Money lenders Ordinance, Cap 176.”
They therefore counterclaimed
that the loan transaction was
illegal and unenforceable in
terms of the Moneylenders
Ordinance Cap 176 and for an
order “re-opening the
transaction on the ground that
the interest and charges were
excessive, harsh and
unconscionable.” The
trial High Court gave judgment
in favour of the plaintiff. The
defendants appealed against the
judgment to the Court of Appeal
where they lost to the plaintiff
again. It was against the
judgment of the Court of Appeal
that the defendants have
appealed to this court
HELD
The plaintiff
did not provide the
justification for the 52 per
cent or the 23 per cent
interest. Since either of them
was excessive, it was harsh and
unconscionable. In simple
straight forward language, all
that these provisions state, in
so far that they apply to the
instant case, is that in any
action involving money lending,
if the court finds that the
interest charged on the amount
lent is harsh and excessive and
therefore unconscionable, the
court may order the transaction
to be re-opened. The provision
has been re-stated in the new
Loans Recovery Act, 1918 (Cap
175) which will be found in the
revised Laws of Ghana, 2006.
STATUTES
REFERRED TO IN JUDGMENT
Loans
Recovery Ordinance, Cap 175(1951
Rev.).
Money lenders
Ordinance, Cap 176
Non Bank
Financial Institutions Act, 2008
(Act 774)
1992
Constitution
Companies
Code Act 179
Diamond
Mining Industry Protection
Ordinance, Cap 152 (1951 Rev.
Limitations
Act, 1972 (NRCD 54)
Moneylenders
Act, 1941 (Cap 176),
CASES
REFERRED TO IN JUDGMENT
Yeboah v
Bofour [1971] 2 GLR 199,
Ayiwah v Badu
[1963] 1 GLR 96, SC
Dua v Afriyie
[1971] 1 GLR 260
Litchfield v
Dreyfus [1906] 1 KB 584,
Kohnor Khoon
v E. K. Lion Hin Ltd [1960] 1
All ER 440
Premore Ltd v
Shaw Brothers [1962] 2 All ER
583.
Royal
Beneficiaries Association v Mrs.
Vivian Mensah and three others,
Civil App No H1/239.2010 dated
13 May 2010
Addy v Irani
Brothers [1991] 2 GLR 30
Olatiboye v
Captan [1968] GLR 146
Bassil v
Kabbara [1966] GLR 102, SC
Dolphyne (No
3) v Speedline Stevedoring Co
Ltd.[1996-97] SCGLR 514, SC
Dapaa v Wae
[1966] GLR 1, SC
Hodgson v the
Republic [2009] SCGLR 642
Mills
Investments Ltd v Leslie [1931]
All ER Rep 442
BOOKS
REFERRED TO IN JUDGMENT
Osborn’s
Concise Law Dictionary, 8th
edition
Black’s Law
Dictionary, 7th
edition
DELIVERING
THE LEADING JUDGMENT
BROBBEY JSC:
COUNSEL
GEORGE
ABORGAH FOR THE
DEFENDANTS/APPELLANTS/APPELLANTS.
F. K. YEBOAH
FOR THE
PLAINTIFF/RESPONDENT/RESPONDENT.
________________________________________________________________
J U D G M E N T
________________________________________________________________
BROBBEY JSC:
This is the
unanimous decision of the court.
In this judgment, the appellants
shall be referred to as the
defendants while the respondent
will be referred to as the
plaintiff or the plaintiff
association. The bare facts
which gave rise to this
litigation were as follows:
The
plaintiff is an association of
which the PW1 is the president.
According to the PW1, the
association was formed with the
aim of sourcing loans for its
members because the members
found it difficult to source
loans for their businesses if
they sourced the loan as
individuals. The association was
registered as a
company
limited by guarantee. The 1st,
2nd and 3rd
defendants denied that they were
members of the Association but
the plaintiff produced evidence
to prove that they were members.
The
association obtained a loan of
three billion old Cedis from the
Ghana Commercial Bank for use by
its members. The first defendant
applied for and was given three
hundred million old Cedis as a
loan which was guaranteed by the
second, third and fourth
defendants. The three billion
Cedis was to have been paid to
the bank within a period of 52
weeks and it attracted interest
of 29 per cent per annum. The
plaintiff did not state the
exact
rate of interest attracted
by the loan to the first
defendant. The 1st
defendant was to have repaid her
loan of three hundred million
Cedis at the rate of nine
million Cedis per week but
within the same 52 weeks. At the
rate of nine million Cedis per
week, the 1st
defendant would have paid four
hundred and sixty eight million
Cedis within the 52 weeks. The 1st
defendant paid the weekly nine
million Cedis for 21 weeks,
after which she stopped or
failed to pay any more money to
the plaintiff. The plaintiff
therefore took action against
her and the other defendants in
their capacities as
guarantors for the recovery
of 279 million Cedis which she
alleged was the balance owed on
the three hundred million Cedis
loan. That transaction between
the plaintiff and the defendants
was evidenced by exhibit A.
The parties
do not dispute that by the
agreement on the facility given
to the first defendant, she was
to have paid GH¢46,800.00 from
the GH¢30,000.00 loaned to her.
The difference was
GH¢16,800.00. By simple
arithmetical calculation, the
difference of GH¢16.800.00 on
the GH¢30,000.00 amounted to 52
per cent. That included the 29
per cent charged by the bank. In
other words, the Association
charged 52 per cent for lending
the GH¢30,000.00 to the first
defendant. If the 29 per cent
were to be deducted from the 52
per cent, the plaintiff would
have charged 23 per cent as
interest on the amount lent to
the first defendant.
At the trial
court,
the defendants contended that
“the terms, interest and other
charges levied on the said loan
are harsh, excessive and
unconscionable in terms of
the Loans Recovery Ordinance,
Cap 175(1951 Rev.).” In
further answer to the claim, the
defendants averred that the
transaction was “illegal and
unenforceable in terms of
the Money lenders Ordinance, Cap
176.” They therefore
counterclaimed that the loan
transaction was illegal and
unenforceable in terms of the
Moneylenders Ordinance Cap 176
and for an order “re-opening
the transaction on the ground
that the interest and charges
were excessive, harsh and
unconscionable.”
The trial
High Court gave judgment in
favour of the plaintiff. The
defendants appealed against the
judgment to the Court of Appeal
where they lost to the plaintiff
again. It was against the
judgment of the Court of Appeal
that the defendants have
appealed to this court,
initially on two grounds, to
which were added three more
grounds. The five grounds will
be read out as and when they are
discussed in this judgment.
APPLICABLE
LAWS
The law on
money lending in Ghana has been
discussed in a number of cases,
particularly in
Yeboah
v Bofour [1971] 2 GLR 199,
Ayiwah v Badu
[1963] 1 GLR 96, SC and
Dua v Afriyie [1971]
1 GLR 260, all of which were
based on the Money lenders
Ordinance, Cap 176 and the
Recovery of Loans Ordinance, Cap
175. Cap 176 was repealed in
2008 by the
Non Bank
Financial Institutions Act, 2008
(Act 774), s. 47(1).
However, since the
1992
Constitution prohibits
retroactive legislation, Act 774
cannot retroactively affect
transactions which took place
before the coming into force of
that Act. The transaction
involved in the instant case
took place in 2004. It cannot be
affected by legislation which
came into force in 2008. Cap 175
has not been repealed. It
follows that both Cap 175 and
Cap 176 are applicable to the
transaction involved in the
instant dispute.
1ST
AND 2ND GROUNDS OF
APPEAL
Counsel for
the defendants argued together
grounds (a) and (b) of the
grounds of appeal. Those grounds
were:
“a The
judgment was against the weight
of evidence and
b.
The trial court erred in law
when it held that the plaintiff
is not a money lender when there
is evidence on record that the
plaintiff continuously lends
money to people and
charges
interest without being in
possession of moneylender’s
license.”
A number of
issues were raised at the trial
court. The most fundamental one
was
whether or not the transaction
was money lending one. In
arguing the first two grounds of
appeal, counsel for the
defendants contended that the
transaction was money lending
one. Counsel for the plaintiff
on the other hand argued that
the transaction was not money
lending one.
The findings
of fact made by the trial court
were these: that the appellant
was an association which was
formed with the object of
rendering financial assistance
to its members: that it took
loans from commercial banks,
specifically, from the Ghana
Commercial Bank, for the benefit
of its members; that it in turn
loaned three hundred million
Cedis of that amount to the
first defendant; that the loans
were legally contracted and that
the terms were neither harsh nor
unconscionable. The Court of
Appeal endorsed these findings
of the trial court. On bases of
those findings, the trial court
and the Court of Appeal
concluded that the transaction
between the first defendant and
the association was not money
lending one.
WHETHER OR
NOT THE PLAINTIFF AS AN
ASSOCIATION WAS A MONEY LENDER
The
fundamental issue in this appeal
is whether or not the
Association was a money lending
one. Who is a money lender?
“Money lending” has been defined
in the definition section of Cap
176 as follows:
“’Moneylender’ means and
includes every person whose
business is that of moneylending
or who carries on or advertises
or announces himself or holds
himself out in any way as
carrying on that business,
whether or not he also possesses
or owns property or money
derived from sources other than
the lending of money and whether
or not he carries on the
business as a principal or as
agent.”
That
definition is followed by
exemptions which are discussed
below in this judgment.
Section 3 of
Cap 176, elaborates on this
definition further by creating a
presumption in the following
terms:
“Any person
who lends money at interest or
who lends a sum of money in
consideration of a larger sum
being repaid shall be presumed
to be a moneylender until the
contrary be proved.”
The
uncontroverted facts in this
case are that the plaintiff gave
out GH¢30,000.00 (or 300,000,000
in the old currency) to the
first defendant. The first
defendant agreed with the
plaintiff to re-pay that amount
by GH¢900.00 per week within a
period of 52 weeks as stated in
exhibit A. That meant that the
total amount to have been
re-paid to the plaintiff was GH¢46,800.00
(or ¢468million in the old
currency). The increase was GH
¢16,800.00 (or ¢168 million in
the old currency). On the face
of section 3 of Cap 176, the
initial onus on the borrower was
to establish that the lender
gave out money in consideration
of being repaid a higher amount.
In so far that the loan of GH¢30,000.00
(or ¢300 million in the old
currency) was to have been
repaid by GH¢46,800.00, the
first defendant discharged the
initial onus on her. She was
able to establish that the
transaction fell within the
definition of a money lender in
section 3 of Cap 176.
After that
had been done, what was required
of the plaintiff? The case
of
Dua v Afriyie
[1971] 1 GLR 260 at
pages 262-263 explained the
implication of section three as
follows:
“The statute
thus creates a rebuttable
presumption in favour of a
person who alleges that another
is a money lender provided that
he shows that that person lent
money even on one occasion.”
On the facts
of the instant case, when the
first defendant established that
the plaintiff had loaned money
in consideration of being repaid
a higher amount, the onus
shifted to the plaintiff to show
that the transaction was not
money lending one. How was this
to have been done? This was
elaborated upon in the same case
of Dua v Afriyie
supra as follows at page 263:
“To escape
the clutches of the Money
Lenders Ordinance Cap 176, the
appellant (the plaintiff in the
instant case) must displace the
statutory presumption by
evidence. That evidence must be
directed to showing that his
business is not that of money
lending or that he does not
carry on or advertise himself or
announce himself or hold himself
out in any way as carrying on
business as a money lender.”
Ground 3
The issue
raised by the onus on the
plaintiff was the main bases of
the third ground of the appeal
which reads as follows:
“the learned
Justices of the Court of appeal
just as the trial judge
misdirected themselves as to the
scope and meaning of section
29(c) of the Money Lenders Ac,
1941(Cap 176) and thereby
misapplied the law when it held
that the plaintiff/respondent is
exempted by the said section
29(c).”
The method by
which the Association will
displace the onus on it is to
place its case in one of the
exceptions in Section 29 of Cap
176. The exceptions as set out
in section 29 are as follows:
“Moneylender
includes a person whose business
is that of money lending or who
carries on or advertises or
announces or holds himself out
in any way as carrying on that
business, whether or not that
person possesses or owns
property or money derived from
sources other than the lending
of money or whether or not that
person carries on the business
as a principal or as an agent,
but does not include
(a)
A society registered under the
Co-operative Societies Act,
1968; or
(b)
A body corporate, incorporated
or empowered by special Act to
lend money in accordance with
that Act; or
(c)
A person bona fide carrying on
the business of banking or
insurance or bona fide carrying
on a business not having for its
primary object the lending of
money, in the course of which
and for the purposes of which
that person lends money; or
(d)
A person or body corporate
exempted from the provisions of
this Act by the Minister; or
(e)
A pawnbroker licensed under the
Pawnbrokers Act, 1940, where
the loan is made in accordance
with the Pawnbrokers Act, 1940,
and does not exceed the sum of
thirty million cedis.”
The plaintiff
contended that it was exempted
under section 29(c). Persons who
qualify under section 29(c)
include “any person … bona fide
carrying on a business not
having for its primary object
the lending of money, in the
course of which and for the
purpose of which that person
lends money.” Indeed, in the
case of Yeboah v Bofour
[1971] 2 GLR 199 at page 201, it
was held that Cap 176
“is not
intended to apply to every
person who lends money at an
interest to his relations or
friends by way of financial
assistance. It applies to only a
person who really carries on the
business of money lending as a
business. Whether a person is
carrying business as a money
lender or not is a question of
fact to be decided by the court
upon the particular facts of the
case.”
To decide
whether or not the plaintiff is
exempted under section 29(c), it
is important to determine what
the primary object of the
plaintiff Association was. In
determining that issue, a
distinction should be drawn
between the plaintiff as an
Association and the members of
the Association. The plaintiff
is a distinct legal entity with
a distinct legal existence. As
legal entities, the members of
the Association are different
from the Association. This case
concerns the Association. It was
the Association which lent the
money to the first defendant. It
was the Association as the
plaintiff which sued the
defendants. The members have not
given any money to the
defendants. The members have not
brought any action against the
defendants. For the purpose of
this case, the plaintiff is
totally different from its
members.
In deciding
the issue of the core or main
business of the plaintiff, the
source from which the money is
obtained to be loaned out should
not be allowed to cause any
confusion. A person lending
money may take his own money to
lend out or borrow money from a
source like a bank to lend out.
Where the money comes from is
not relevant. It is the object
of giving out the money which
matters. That object determines
whether it is money given out as
a benevolent gesture, friendly
assistance or money lent to make
more money by way of profit from
the interest earned on the money
lent. The trial court and the
Court of Appeal upheld the view
of the plaintiff that the
transaction was friendly
assistance to members of the
association. Friendly assistance
can take many forms. What cannot
be denied is that “friendly
assistance” does not attract
interest. Where the money given
out as “friendly
assistance” attracts
interest of 52 or 23 per cent,
that transaction will cease to
be “friendly,” let alone
an “assistance.”
The view that
the transaction was a friendly
assistance was not conceptually
sustainable.
The question
to be answered is this: What
business does the Association,
qua Association, do? Identifying
the business will facilitate the
decision to be taken on the
“primary object” of the business
of the Association.
The plaintiff
seems to have based its case on
what occurred in three English
cases which both counsel for the
plaintiff and counsel for the
defendants referred to in their
addresses. They were the cases
of
Litchfield v Dreyfus [1906]
1 KB 584, Kohnor Khoon v
E. K. Lion Hin Ltd
[1960] 1 All ER 440 and
Premore Ltd v Shaw Brothers
[1962] 2 All ER 583. In all
these three cases, the lenders
were engaged in their main or
core businesses but they
resorted to borrowing or lending
as a sideline to promote the
main business. In the last case
of Premore Ltd v Shaw
Brothers, the plaintiffs
were financiers of hire
purchase. That was their core
business. Lending and borrowing
money was not their main
business. In Koh Hor Khoon
v E. K. Lion Ltd,
the respondents were rubber
merchants and shippers. That was
their core business. Borrowing
money and lending to members was
not the core business as such.
In Lietchfield v
Dreyfus, the
lenders were dealers in antiques
and art works. That was their
main or core business. Borrowing
money and lending it was not
their core or main business.
In the
instant case before this court,
there is no evidence that the
Association was engaged in any
other business apart from taking
moneys from the bank and giving
it out to its members. Counsel
for the plaintiff exhibited a
judgment of the Court of Appeal
entitled
Royal Beneficiaries
Association v Mrs. Vivian Mensah
and three others, Civil App
No H1/239.2010 dated 13 May 2010.
On facts quite similar to those
in the instant case, that the
Court of Appeal took the view
(at page 11 of the judgment)
that “the appellant as an
Association engages in no
business of its own but
its members do.” That
finding with respect could not
be correct. How could an
Association be formed and
registered to do no business?
What was it registered for? It
must have been registered for a
purpose? In this country, no
association can be registered
unless its objects and purposes
have been declared on the
registration forms. Those
objects and purposes will spell
out the business of the
association. Unfortunately for
the plaintiff, that case did not
assist the stand it took in this
case.
The facts in
the instant case do not support
the impression given by the
plaintiff that the association
had been registered to sell
cloth as its core business but
it resorted to borrowing as a
sideline with the view to
improving the capital base of
their businesses so as to
promote the core businesses of
cloth selling. That is not what
the Association was registered
for. It was registered
specifically to raise loans from
banks and lend them to its
members. That was what the
president of the association
told the trial High Court in her
evidence. From the facts, it
cannot be denied that the
business of the Association, qua
Association, was to raise loans
and lend them out to its
members. The core or main
business of the Association was
to raise money and lend it to
its members. If further
confirmation is required of this
view, one may look at the
position taken by the
originators of the loan
transaction, namely, the Ghana
Commercial Bank.
In exhibit 5,
the letter from the Ghana
Commercial Bank to the
Association granting the loan
facility of three billion Cedis,
it is stated as follows:
“Dear
Madam,
FACILITY
LETTER
We refer to
your application dated March 22,
2004 and are pleased to advise
that the bank has approved the
following in favour of your
Association.
FACILITY
Short-term
loan of three billion Cedis
PURPOSE
For lending
to members of the Association as
working capital.
Etc, etc…….
(Emphasis mine)”
What this
exhibit demonstrates is that
even the bank described the
transaction as money for
lending to the members
of the Association. That was how
the bank which was the
originator of the money
understood the use to which the
amount would be put.
If taking
money from the bank and giving
it out with interest is not
money lending, we cannot imagine
what else will constitute money
lending. Since the primary or
core object of the business of
the Association was to raise
money and lend it, the
Association was engaged in money
lending.
As it was
rightly held in Yeboah v
Bofour supra, whether or
not a person is a money lender
is a question of fact to be
decided on the circumstances of
each case. The logical
conclusion one can come to on
the peculiar facts of this
particular case is that the
plaintiff was a money lender.
In so far
that the plaintiff‘s core in the
business was that of money
lending, it was not exempted
under section 29(c) of Cap 176.
JUSTIFICATION
FOR THE 52 PER CENT OR THE 23
PER CENT INTEREST
It has
already been explained that the
whole transaction raised 52 per
cent interest. The bank interest
was 29 per cent. Taking 29 from
52 would leave 23 per cent. If
the 29 per cent was the bank
interest, it meant that the
plaintiff took 23 per cent from
the transaction. The question
that remains to be answered is
what happened to that 52 per
cent or the 23 per cent? The 52
per cent or the 23 per cent
could not have covered
administrative and legal
expenses. The evidence showed
that the first defendant paid
nine hundred Ghana Cedis and
three hundred Ghana Cedis for
administrative and legal
expenses respectively. These
were paid for separately from
the weekly installments of 9
million Cedis. There was no
evidence that the president
accounted for the 23 per cent to
the members on any occasion. The
only conclusion deducible from
the facts as presented by the
plaintiff and its president, the
PW1, is that the 23 per cent
went to the PW1 as profit on the
transaction. It went to her
because the evidence showed that
she was the one who run the
affairs of the plaintiff
association.
The PW1 in
her evidence stated that there
were other expenses like
servicing the registration of
the documents used as collateral
for the loan from the Ghana
Commercial Bank. She did not
however place any money value on
those expenses. Counsel for the
plaintiff in his address also
referred to the fact that the
plaintiff had to incur other
expenses. He too did not point
out the monetary value of those
expenses. To establish the
justification for the interest,
the onus was on the plaintiff to
have led evidence to show what
constituted the expenses
incurred in administering the
loan for the members for which
the interest was required to be
used to offset those expenses
and how much they cost in terms
of money. The PW1 was evasive in
her answers on this issue.
If she had
explained what those expenses
were and how much they cost in
terms of money, it would have
been possible for the court to
evaluate those expenses in
relation to the interest she
charged on the amount loaned.
That would have allowed the
appropriate decision to be taken
as to whether the expenses were
reasonable, fair and justifiable
or excessive and harsh. Not
having led any evidence on those
expenses, it can only be
presumed that the amount in the
52 per cent or the 23 per cent
went to the plaintiff and its
president.
The
Association was a registered
one. Exhibit D which is the
certificate of incorporation
showed on its face that the
Association was registered as
one “limited by guarantee.”
Under normal circumstances, an
Association limited by guarantee
does not make profit.
Counsel for the plaintiff cited
parts of the
Companies
Code at pages 263 and 264,
paragraph 3, to show that a
company limited by guarantee is
sometimes allowed to make
profit. But the proviso to the
passage he cited showed that the
profits are to be used “for
the payment in good faith
of reasonable and proper
remuneration to any officer of
the society.” There is no
evidence that part of the 52 per
cent or the 23 per cent was used
to pay the officials of the
association. In any case, that
passage he relied on begins by
emphasizing that:
“The income
and property of a society
whensoever derived shall be
applied solely towards the
promotion of the objects of the
society as set forth in the
immediately preceding regulation
and no portion thereof shall be
paid or transferred directly or
indirectly by way of dividend,
bonus or profit to any person
who is a member of the society
or council.”
It has been
found in this judgment that the
52 per cent or the 23 per cent
went to the plaintiff and its
president. The plaintiff did not
say that the moneys in the 23
per cent were used to pay the
officers of the association. The
reference to the Companies Code
did not assist the plaintiff’s
case.
Application
of Cap 176 and Cap 175
The position
with regard to the charging of
such interest on money lending
transactions was originally
regulated by Cap 176, s 13(1)
(c), which stated that:
“13. (1)
Where, in any proceedings in
respect of any money lent by a
money lender or by any person
other than a money lender after
the commencement of this
Ordinance, or in respect of any
agreement or security made or
taken after the commencement of
this Ordinance in respect of
money lent either before or
after the commencement of this
Ordinance, it is found that -
…(c) on an
unsecured loan the interest
exceeds the rate of 30 per cent
per annum or the corresponding
rate in respect of other period,
the court, notwithstanding any
native law or custom to the
contrary, shall, unless the
contrary is proved, presume for
the purposes of the Loan
Recovery Ordinance, that the
interest charged is excessive
and that the transaction is
harsh and unconscionable, but
this provision shall be without
prejudice to the powers of the
court under that section where
the court is satisfied that the
interest charged, although not
exceeding the rates mentioned in
this section, is excessive.”
These
provisions have been repeated in
the new Moneylenders Act, 1941
(Cap 176), s 11.
The loan of
GH¢30,000.00 (or ¢300million in
the old currency) given to the
first defendant was unsecured in
that there was no collateral or
security for it. On the basis
that the plaintiff charged 52
per cent which exceeded the 30
per cent referred to in section
13(1) (c) just quoted, the
interest levied by the plaintiff
was excessive, “harsh and
unconscionable.” As the last
clause of section 13(1)
indicates, even if the 23 per
cent does not exceed the rate of
thirty per cent, it was still
excessive when one considers
that the Ghana Commercial Bank
which gave out the initial loan
bank charged 29 per cent.
The plaintiff
did not provide the
justification for the 52 per
cent or the 23 per cent
interest. Since either of them
was excessive, it was harsh and
unconscionable.
LEGALITY OR
ILLEGALITY OF THE TRANSACTION
Cap 176, s 4
requires that any person who
carries on the business of money
lending should possess a money
lender’s license. There is no
doubt that the plaintiff had no
money lender’s license. Counsel
for the defendants contended
that since the plaintiff had no
money lender’s license, the
transaction was illegal. In his
view, the courts are not set up
to enforce illegal contracts and
therefore the transaction should
not be enforced. The legality or
otherwise of the transaction
raises serious issues which need
to be addressed.
In the law of
contract, agreements or
contracts are described as
illegal, void, null,
enforceable, unenforceable,
voidable, etc, and by the use of
various appellations. Each word
carries its own meaning and
connotation. It appears that
counsel for the defendants has
not used the descriptions of the
“contract” or the “transaction”
in the instant case with much
precision.
Osborn’s
Concise Law Dictionary,
8th edition,
at page 169 defines illegal
contract as:
“A contract
that is prohibited by statute
(e.g. one between traders for
minimum resale prices) or at
common law as being contrary to
public policy (such as
agreements in restraint of
marriage). It is void and
neither party can recover money
paid under it.”
Black’s Law
Dictionary,
7th edition,
at page 322 also defines illegal
contract as
“A promise
that is prohibited because the
performance, formation, or
object of the agreement is
against the law. Technically
speaking, an illegal contract is
not a contract at all, so the
phrase is a misnomer.”
An illegal
contract is one which is null
and void; it is of no effect
whatsoever and is clearly
unenforceable. It affects both
parties to the contract and none
of them can enforce it. A
typical instance of an illegal
contract is agreement by drug
dealers to trade in drugs.
Another instance of such
transaction was in
Addy v Irani Brothers[1991]
2 GLR 30 where the plaintiff
sued for money illegally
acquired by selling goods above
the legally controlled price and
for foreign money acquired
through changing money at
“black market.” The subject
matters in that case, like
drugs, were illegal and were
therefore irrecoverable through
the courts. None of the parties
can sue on any such agreement or
contract because the law does
not protect even parties found
to be innocent but who can at
the same time be described as
being in pari delicto. It
is a contract which literally
does not exist and it is in that
sense it is said to be a
misnomer to describe such a
transaction as a contract or
agreement.
A contract or
agreement which is against the
provisions of a statute is not
necessarily illegal. In
Olatiboye v Captan
[1968] GLR 146 where the
argument was canvassed that a
transaction was illegal because
it violated the provisions of
the
Diamond Mining Industry
Protection Ordinance, Cap 152
(1951 Rev.), s 3(1) in that
the plaintiff had no license as
required by that statute,
Amissah JA drew the distinction
between the two types of
contracts as follows:
“(1) it is
not every infringement of a
statutory provision that makes a
contract illegal and therefore
unenforceable. Where the act
contemplated by the contract was
prohibited by statute but was
subject to a penalty which was
merely for the benefit of the
revenue, the contract could be
enforced. Where the provisions
of a statute indicated the
intention of the legislature to
prohibit the contract itself,
then even though the penalty
imposed for a breach
incidentally benefitted the
revenue, the contract would
nevertheless be illegal and
unenforceable.”
Lending money
is a social phenomenon. No
legislature can legislate to
prohibit it. If it does, it will
be an exercise in futility
because people cannot be stopped
from borrowing money and lending
it when needs arise. Even the
Bible endorsed borrowing and
lending in the Old Testament as
will be found in Exodus 22: 25
which reads:
“If you lend
money to any of my people who
are poor, do not act like a
money lender and require him to
pay interest.”
Similar
endorsement of borrowing and
lending will also be found in
the New Testament in Luke 6:
34-35 which reads:
“Love your
enemies and do good to them.
Lend and expect nothing back.
You will then have a great
reward and will be the children
of the Most High God.”
It was not
the intendment of the
legislature when it passed Caps
176 and 175 to prohibit lending
and borrowing. Money lending and
borrowing were not proscribed or
prohibited by Cap 176 or Cap
175. All that the legislature
did by the two statutes was to
regulate the methods of lending
and borrowing by getting lenders
to acquire licenses which place
some obligations on them for the
protection of borrowers. That
was what section 5 of Cap 176
which regulated lending money
without license was intended
for.
A contract
may be in violation of a statute
and yet it may be enforceable.
Such a contract can be described
as voidable. It is not void but
may be enforced on the
satisfaction of certain
conditions. Analogy may be drawn
from the
Limitations Act, 1972 (NRCD 54).
Sections 2, 3, 4, 5, and 6 of
the Act begin by stating
categorically that “a person
shall not bring an action after
the expiration of
….certain periods…etc.” Yet,
if an action is brought in
violation of that statute, that
action does not become
unenforceable. If the action is
outside the statutory time
limits and therefore in
violation of the statute but the
defendant does not plead
limitation, the contract will be
enforced: see
Bassil v Kabbara [1966]
GLR 102, SC. In fact, the
rule is that the court has to
enforce the contract even if it
is in violation of the statute
but limitation is not pleaded
and this is so where the court
is fully aware that the action
is statute barred. The court is
not allowed suo motu to apply
limitation to dismiss the
plaintiff’s action. A direct
authority on this is
Dolphyne (No 3) v Speedline
Stevedoring Co Ltd.[1996-97]
SCGLR 514, SC.
In effect,
contracts on money lending may
be illegal which will imply that
they are null, void and
unenforceable ab initio in their
formation, performance or
enforcement. They may, on the
other hand, be voidable and
enforceable on the satisfaction
of certain conditions and
payment of certain penalties.
Where a
contract is in violation of a
statute, that statute invariably
sets out the exact status of
such a contract. If the statute
prohibits or proscribes the
contract in its formation,
performance or enforcement, it
so provides in no uncertain
terms. If the statute does not
prohibit it but allows it to be
enforced on the satisfaction of
certain conditions or the
payment of certain penalties, it
provides that in the statute
itself. The money lending
transaction which is the subject
matter of the instant appeal is
regulated by Cap 175 and Cap
176. Section 5(c) and (2) of
the old Cap 176 in the 1951
Revised Laws of the Gold Coast
has been replaced with section 3
of the Money Lenders Act, Cap
176, to be found in the green
coloured revised Statutory Laws
of Ghana, 2006. Both the old
section 5(c) and (2) and the new
section 3 make it an offence to
lend money without license. They
go further to prescribe
sanctions for such dealings
which constitute the offence.
The old Cap
176, s 5 read as follows:
“5. If any person –
(a)
Takes out a moneylender’s
license in any name other than
his true name; or
(b)
Carries on business as a
moneylender without being in
possession of a valid
moneylender’s license
authorizing him so to do; or
(c)
being licensed as a money
lender, carries on business as
such in any name other than his
authorized name, or at any other
place than his authorized
address o addresses; or
(d)
Enters into any agreement in the
course of his business as a
moneylender with respect to the
advance or repayment of money or
takes any security for money in
the course of his business as a
moneylender, otherwise than his
authorized name;
He
shall be for each offence be
liable on summary conviction –
(1)
If other than a body corporate,
to a fine not exceeding one
hundred pounds and in the event
of a second or subsequent
conviction to imprisonment for
three months or a fine of one
hundred pounds or both; and
(2)
In the case of a body corporate,
to a fine of one hundred pounds
and in the event of a second or
subsequent conviction to a fine
of five hundred pounds:
Provided that
no prosecution shall be
instituted under paragraph (b)
without the consent of a Law
Officer.”
In the new
Moneylenders Act, 1941 (Cap
176), s 2 makes it mandatory
for every moneylender to obtain
a moneylender’s license before
operating. Section 3 which
replaced section 5 of the old
Cap 176 states that:
“3. Penalty for breaches of
section 2
(1)
A person commits an offence if
that person
(a)
takes out a moneylender’s
license in a name other than the
true name of that person, or
(b)
carries on business as a
moneylender without being in
possession of a valid
moneylender’s license
authorizing that person to do
so, or
(c)
being licensed as a moneylender,
carries on business as a
moneylender in name other than
the authorized name, or at any
other place than the authorized
address, or
(d)
enters into an agreement in the
course of business as a
moneylender with respect to the
advance or repayment of money or
takes a security for money in
the course of business as a
moneylender, otherwise than in
the authorized name.
(2)
A person convicted of an
offence under subsection (I) is
liable on summary conviction,
(a)
In the case of a person, other
than a body corporate, to a fine
not exceeding two hundred
penalty units, and in the event
of a second or subsequent
conviction to a term of
imprisonment for six months or
to a fine of two hundred penalty
units or to both the fine and
the imprisonment;
(b)
In the case of a body
corporate, to a fine of two
hundred penalty units and in the
event of a second or subsequent
conviction to a fine of one
thousand penalty units.
A prosecution
shall not be instituted under
paragraph (b) without the
consent of the
Attorney-General.”
No where in
section 5 of the old Cap 176 or
section 3 of the new Cap 176 are
the words “illegal,” “void” or
“unenforceable” used to describe
any money lending transaction
which is carried out without the
lender being in possession of a
valid money lender’s license.
Other sections dealing with
criminal offences and criminal
sanctions are sections 25 and
26. Section 26 of the old Cap
176 renders void and
unenforceable the taking of a
security or promissory note in
respect of money lending
transaction which leaves the
amount blank or does not truly
state the amount. Such a
transaction is fraudulent. Fraud
vitiates everything. The
transaction should therefore be
void and unenforceable. It was
for these principles that
Dapaa v Wae [1966] GLR
1, SC held that a
transaction which breached
section 26 of the old Cap 176
was void and unenforceable. On
the basis of those principles
and in the face of the express
provisions of section 26, that
decision cannot be faulted.
The instant
case does not concern security
or promissory note. The loan
transaction with the first
defendant was unsecured. No
security issue was therefore
raised. The instant appeal which
concerns lending money without
license is regulated by section
5 quoted above which does not
render the transaction void or
unenforceable.
The same Cap
176, s 13 refers to Cap 175 for
remedies. By section 13 of Cap
176 and section 3 of Cap 175,
the remedies are that the
transaction should be re-opened.
Re-opening has been considered
below in this judgment. The fact
that the sections provide
remedies clearly shows that the
intendment of the Legislature in
Caps 175 and 176 was not to
render the money lending
transaction illegal or void. If
it were illegal, as explained
already, the transaction would
cease to exist. A non-existing
contract cannot be re-opened.
Therefore, if it were illegal,
there would have been no basis
for the provision that the
transaction should be re-opened.
The
contention of counsel for the
defendants that the transaction
was illegal because it infringed
the provisions of Cap 176 is
untenable and is dismissed.
LENDING TO
MEMBERS ONLY
One of the
points canvassed in favour of
the plaintiff was that the
Association lent the moneys to
only members and to the extent
that non members were
disqualified, the plaintiff
could not properly be described
as a money lender. This argument
was based on decisions in the
British case of Litchfield
v Dreyfus, supra, that
to qualify as the business of
money lending, the lender should
be in a position to lend to all
and sundry and not to limited
members. The principles to be
applied to a situation like that
which arose in the instant case
were enunciated by Azu Crabbe
JSC (as he then was) in
Yeboah v Bofour supra.
After referring to the English
Money Lenders Act of 1900 and
provisions equivalent to the
provisions of Cap 176, he
concluded at page 208 that:
“There must
be a business of money lending,
and the word “business” imports
the notion of system, repetition
and continuity….If it appears
that the transactions are
sufficiently numerous to require
the inference that a system and
business of money-lending is
carried on, then the requirement
of s 6 of the 1900 Act are
fulfilled and the question
arises whether the case falls
within the exceptions indicated
in that section..”
In the
instant case, the defendants
were able to establish that the
president of the plaintiff was
engaged in different money
lending transactions with
different company names. The
Registrar of the Circuit Court
who was called as the witness of
the defendants told the trial
court that the plaintiff had as
many as 97 cases in one court in
which the president, Joan
Ewuraba Ocran, had sued debtors
in the names of three companies,
namely, Ahenfie Cloth Sellers
Association, Royal Beneficiaries
Association and Maye Kom
Association. It is true that the
instant case concerns only
Ahenfie Cloth Sellers
Association: Yet the facts of
being engaged in different
companies involving several
debtors could not just be
ignored by the court. The
evidence showed a pattern or
system. The system was that the
associations had been set up to
source for loans: When the loans
were obtained, they were lent to
members. It was not just one
isolated transaction. They were
many, as the court cases in
exhibits 6, 7 and 8 indicated.
The plaintiff had set up those
companies to make money from the
loans granted to borrowers by
the interest charged. That
system is further evidence that
the plaintiff was engaged in
money lending transactions but
in different names. For as long
as she borrowed money to lend to
people with interest, she was
engaged in money lending
transactions with the aid of the
companies she set up, of which
the instant case before this
court is one.
On the facts,
to loan money and charge
interest as much as 52 per cent
was clearly excessive and harsh.
The trial judge and the Court of
Appeal erred in holding that the
interest was not excessive or
harsh. If the two courts below
had analyzed the facts on the
record more carefully, they
would have come to the
conclusion that it was harsh and
excessive to loan money at an
interest of 52 per cent or even
at 23 per cent.
What this
conclusion amounts to is that
the plaintiff did not succeed in
establishing that her case fell
within the provisions of the
exceptions in that section 29 of
Cap 176.
The
conclusion of the Court of
Appeal on the issue of the
reasonableness of the interest
was wrong and cannot be
accepted.
Grounds one,
two and three of the grounds of
appeal succeed and are upheld.
Concurrent
findings of fact
This court is
not unmindful of the principle
that where lower courts have
made two concurrent findings of
fact, the subsequent court on
appeal has to tread cautiously
in disturbing those findings. At
the same time, the well
established rule is that an
appeal is a re-hearing and where
the findings of the lower courts
are not supported by the
evidence, the appellate court
should be in a position to make
the appropriate conclusions from
the facts and evidence on the
record. In the instant case,
however, the core or main
business of the Association
being one of taking loans and
lending them out, the two lower
courts should have considered
the purpose for which the
Association was set up in
relation to its core business
before concluding that it was
not engaged in money lending and
so was exempted by section 29(c)
of Cap 176.
Hodgson v the Republic
[2009] SCGLR 642 (holding 6)
provides an instance where this
court has recently departed from
the findings of lower courts.
Ground four
of the grounds of appeal
read as follows:
“The learned
justices of the Court of Appeal
erred in law when they concluded
that the business of the
individuals is the business of
the plaintiff though the
plaintiff is a company
incorporated under the Companies
Act, 1963 (Act 179).”
This is not a
ground over which much time
should be spent because counsel
for the plaintiff admitted that
the business of the Association
was different from the business
of the members. No such
assumption or finding was made
by the Court of Appeal. The
facts show that the plaintiff
was an Association registered to
source for loans and lend them
out to its members. Borrowing
moneys and lending them out to
members were its business. The
members were cloth sellers. In
other words, cloth selling was
the business of the members. The
two businesses were not the
same. The business of the
individual members could not be
the same as the business of the
Association.
There is no
merit in that ground of appeal
and same is dismissed.
CONSENT BY
THE BORROWER TO ENTER INTO THE
TRANSACTION
Again, even
if it were argued that the
defendants knew of the harsh and
excessive terms and yet they
consented to them by entering
into agreement with the
plaintiff, Cap 176, s 13 (3) and
Cap 175, 3(1) allow the
agreement to be enforced,
“whichever form it may be”
so long as it is a money lending
transaction. In
Mills Investments Ltd v
Leslie [1931] All ER Rep
442 which was based on the
British Money Lenders Act, 1927,
(c. 21), s 10, the terms of
which were similar to those in
Cap 176, s 13(1), it was held
that even where a party
consented to judgment, that
consent did not relieve the duty
of the courts to enforce the
presumption arising out of the
loan transaction.
RE-OPENING OF
THE TRANSACTION
Where the
transaction is found to be
excessive, harsh and
unconscionable, it is regulated
by the Loans Recovery Ordinance,
Cap 175, s 3 which provides
that:
“3(1) Where
proceedings are taken in any
court for the recovery of any
money lent after the
commencement of this Ordinance,
or the enforcement of any
agreement or security made or
taken after the commencement of
this Ordinance, in respect of
money lent either before or
after the commencement of this
Ordinance, and there is evidence
which satisfies the court that
the interest charged in respect
of the sum actually lent is
excessive, or that the amount
charged for expenses, enquiries,
fines, bonus, premium, renewals,
or any other charges, are
excessive and that, in either
case, the transaction is harsh
and unconscionable, or is
otherwise such that a court of
equity would give relief, the
court may re-open the
transaction, and take an account
between the lender and person
sued, and may, notwithstanding
any statement or settlement of
the account or any agreement
purporting to close previous
dealings and create a new
obligation, re-open any account
already taken between them, and
relieve the person sued from
payment of any sum in excess of
the sum adjudged by the court to
be fairly due in respect of such
principal, interest, and
charges, as the court having
regard to the risk and all the
circumstances may adjudge to be
reasonable; and, if any such
excess has been paid, or allowed
on account, by the debtor, may
order the creditor to repay it;
and may set aside, either wholly
or in part, or revise, or alter,
any security given or agreement
made in respect of the money
lent by the lender, and if the
lender parted with the security
may order him to indemnify the
borrower or other person sued.
(2) Any court
in which proceedings might be
taken for the recovery of money
lent by a lender shall have and
may, at the instance of the
borrower or surety or other
person liable, exercise the like
powers as may be exercised under
this section where proceedings
are taken for the recovery of
money lent; and the court shall
have the power, notwithstanding
any provision or agreement to
the contrary, to entertain any
application under this Ordinance
by the borrower or surety, or
other person liable,
notwithstanding that the time
for repayment of the loan, or
any installments thereof, may
not have arrived.
(3) The
foregoing provisions of this
section shall apply to any
transaction which, whatever its
form may be, is substantially
one of money lending.”
In simple
straight forward language, all
that these provisions state, in
so far that they apply to the
instant case, is that in any
action involving money lending,
if the court finds that the
interest charged on the amount
lent is harsh and excessive and
therefore unconscionable, the
court may order the transaction
to be re-opened. The provision
has been re-stated in the new
Loans Recovery Act, 1918 (Cap
175) which will be found in the
revised Laws of Ghana, 2006.
That Act begins by the provision
that:
“1. (1) the
court may re-open a transaction
where the transaction is harsh
and unconscionable or is
otherwise in respect of which a
court of equity would give
relief.”
In re-opening
the transaction, the court is
empowered under the old Cap 175,
s 3(1) to consider all the
charges levied by the lender as
well as other expenses
incidental to the loan given to
the borrower. The new Cap 175, s
1(2) (a) and (b) provide that
in re-opening the transaction,
the court may take into account
a statement or settlement of the
account or agreement purporting
to close previous dealings and
opening a new obligation. Other
factors which the court should
take into account are the
necessities of the borrower, her
pecuniary position, the presence
or absence of security, the
relationship in which the lender
stood to the borrower and the
total remuneration derived by
the lender from the whole
transaction.
At the same
time, it should consider the
fact that the first defendant
benefitted from the transaction.
As a court of equity, she should
not be allowed to take the
money, make use of it and shirk
her responsibility to pay what
is due from her, considering, as
she knows too well, that the
initial loan was taken from the
Ghana Commercial Bank to which
refund should be made with
interest of 29 per cent.
Considering
all the circumstances of the
case, we think that interest of
eleven per cent over and above
the 29 per cent would be fair,
i.e. the total interest on the
GH¢300,000.00 should be forty
per cent which the first
defendant should pay, effective
from the day the loan was
granted to her. That should
cover the 29 per cent from the
bank and possible expenses that
would be incurred in order to
administer the loan. This
conclusion implies that the
parties open their accounts and
work out how much had been paid
by the time the first defendant
stopped the payment, and credit
her with those payments.
For the
avoidance of doubt, the interest
should continue to run till the
day of final of payment by the
first defendant.
RE-OPENING AT
THE INSTANCE OF THE BORROWER
The fact that
it was the defendants who in
their counterclaim applied for
the transaction to be re-opened
did not make any difference. In
Ayiwah v Badu
[1963] 1 GLR 86, SC, it was held
(in holding 3) that:
” A
borrower’s right to sue and
maintain a claim for the
re-opening of a loan transaction
on the ground that it is harsh
and unconscionable and for
accounts is set out in the Loans
Recovery Ordinance, s 3(1) in
unambiguous terms?”
For the
avoidance of doubt, Cap 175, s
3(3) provides that:
“3(1) the
foregoing provisions of this
section shall apply to any
transaction which, whatever its
form may be, is substantially on
one money-lending.”
Cap 176, s
13(3) also emphasizes the
efficacy of this provision by
stating that:
“13(3) the
powers of a court under the said
subsection 3 of section one of
the Loans Recovery Ordinance may
be exercised notwithstanding
that the money lender’s right of
action for the recovery of the
money lent is barred.”
These two
provisions underline the fact
that even if the transactions
were to be considered as
violations of Cap 176, they were
still enforceable to the extent
that the courts are empowered to
re-open them. Yeboa v
Bofour supra held (in
holding 5) that money lending
transaction by a lender without
a valid license is void under
Cap 176, s 5(a) and (d). Section
5 has already been quoted in
full above. With respect, the
provisions in section 5 do not
state or even imply that any
transaction for lending money
without a valid license is void.
They merely create offences and
prescribe the consequences for
those who commit those offences.
The consequences are the payment
of fines or imprisonment.
Holding 5 of that decision
cannot be correct.
Ground 5 of
the grounds of appeal
stated that:
“The court
erred in making order in favour
of the plaintiff/respondent in
the face of clear evidence that
the plaintiff/respondent was
carrying on business for profit
in breach of the provisions of
the Companies Code, 1963 (Act
179).”
The orders
made herein justify this last
ground of appeal. That ground
succeeds and is upheld.
From the
foregoing, the appeal fails in
part on ground four and succeeds
in part on grounds one, two,
three and five.
In the
result, judgment is entered in
favour of, or against, the
plaintiff and the defendants in
the terms set out in this
judgment.
It has to be
re-iterated that the instant
appeal has been decided on its
own facts and that is why the
interest was set at that rate.
It should not be taken as
setting interest rates for other
money lending transactions
involving the plaintiff and any
other person or body. Each case
has to be decided on its own
facts and circumstances.
In the
proceedings of this case,
attention has been drawn to the
fact that there are numerous
cases pending in the courts
involving similar money lending
transactions. Although each case
still remains to be decided on
its own facts, it is considered
desirable to set out the general
guides which may assist in the
determination of similar cases.
The rules established over the
years and deducible from decided
cases are these:
1.
In money lending transactions,
the borrower assumes the initial
onus to establish that the
lender has lent money at an
interest.
2.
When it is established that a
person has lent money at an
interest even on one occasion,
the transaction is presumed to
be money lending one under the
Money Lenders Ordinance, Cap
176.
3.
Once that presumption has been
raised, the onus shifts to the
lender to prove that the
transaction is not money lending
one.
4.
Cap 176 applies to a person
whose business it is to lend
money. It does not apply to a
person who helps friends or
relations with money lent to
them.
5.
Whether or not any transaction
will mount to money lending one
will depend on the facts and
circumstances of the case. Each
case has to be considered on its
own facts and circumstances.
6.
For the lender to prove that she
is not a money lender, she has
to lead evidence which places
her transaction under one of the
exceptions raised in the Money
lender’s Ordinance, Cap 176, s
29.
7.
The established rule is that the
onus on the lender is one of the
rare occasions where a party
will be required to prove the
negative, ie to prove that she
is not a money lender.
8.
If the lender is able to prove
that she is not a money lender,
her case will be upheld and the
defendant ordered to pay
whatever she owes to the
plaintiff.
9.
If she is not able to prove
that, the transaction may have
to be considered to the extent
that it is reasonable or harsh
and excessive and conscionable
or unconscionable, based on its
terms and conditions.
10.
If it is found to be
unconscionable, the court is
empowered to re-open the
transaction under Cap 176, s 13
and the Loans Recovery
Ordinance, Cap 175, s 3.
11.
In re-opening the transaction,
the governing principle is that
the fact that a person lends
money without being in
possession of a money lending
license amounts to a breach of
the statutes on money lending,
ie Cap 176 and Cap 175. The
transaction is enforceable
within the terms of the statute
which had been breached. That
fact does not render the money
lending transaction illegal.
12.
After the transaction has been
re-opened, the terms and
conditions imposed by the court
will depend on the terms and
conditions of each particular
case. Each case has to be
decided on its own facts and
circumstances.
S. A. BROBBEY
JUSTICE OF
THE SUPREME COURT
J. ANSAH
JUSTICE OF
THE SUPREME COURT
R. C. OWUSU
(MS)
JUSTICE OF
THE SUPREME COURT
ANIN YEBOAH
JUSTICE OF
THE SUPREME COURT
B. T.
ARYEETEY
JUSTICE OF
THE SUPREME COURT
COUNSEL:
GEORGE
ABORGAH FOR THE
DEFENDANTS/APPELLANTS/APPELLANTS.
F. K. YEBOAH
FOR THE
PLAINTIFF/RESPONDENT/RESPONDENT.
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