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JUDGMENT:
Plaintiff has sued Defendant for
the following:
“ 1. An order for payment
of the sum of GH¢54,202.75
(Fifty Four Thousand, Two
Hundred and Two Ghana Cedis,
Seventy Five Pesewas) being
balance due and owing as at 27th
October, 2008 on account of
credit facilities extended to
the Defendant Company by the
Plaintiff Company, the repayment
of which was secured with Plot
No.7 Block 9 Section 5036
situate at Old Town Odum, Kumasi
but settlement of which
Defendant has failed to settle
several demand notices
notwithstanding.
2.
Interest on the said sum of
GH¢54,202.75 (Fifty Four
thousand, Two Hundred and Tow
Ghana Cedis, seventy-Five Ghana
Pesewas) at the contractual rate
of 5% per month from 27th
October, 2008 up to and
inclusive of the date of the
final payment.
3.
Costs.”
Plaintiff’s case is that at the
request of Defendant Company,
Plaintiff granted various credit
facilities totalling
GH¢28,000.00 to the Defendant at
an interest rate of 5% per
month. The purpose of the
facilities was to enable
Defendant execute a contract
awarded by Cape Coast and
Takoradi Polytechnics.
Defendant duly accepted the
terms and conditions of the
offer letters dated 22nd
March, 2006 and 4th
May, 2006. On the said dates,
Defendant also executed
promissory notes for the
repayment of the facilities on
the due dates (Exhibits “C” and
“D”). Defendant offered landed
property situate at Block 9
Section 5036 Old Town, Odum
Kumasi as security for
repayment. The facilities
expired on 27th
October, 2008 with an
outstanding balance of
GH¢54,202.75.
Defendant denies Plaintiff’s
claim and contends that the
credit facilities granted to it
by Plaintiff were in the sum of
GH¢20,000.00. Defendant’s
Managing Director, Kwame Asamoah
(D.W.1), testified that the
facilities were given to
Defendant in two (2) tranches;
GH¢8,000 and GH¢20,000.00 making
a total of GH¢28,000.00. D.W.1
testified further that Defendant
paid an amount of GH¢10,000.00
in repayment of the first
facility of GH¢8,000. In his
view therefore the facility of
GH¢20,000 ought to have been
reduced to GH¢18,000.00. He
tendered in evidence as Exhibit
“1”, a Statement of Account
received from Plaintiff. In the
said Exhibit “1” the only
repayment made by Defendant
after the said GH¢10,000 was
GH¢5,000.00. There was an
outstanding balance of
GH¢29,174.22 as at April 28,
2008. D.W.1’s evidence however
was that Defendant owed
GH¢13,000 as at the date he gave
evidence; i.e. 22nd
February, 2010, and interest
exigible ought to be calculated
on the said GH¢13,000.00.
D.W.1’s further evidence was
that he complained a number of
times to the management of
Defendant Company about the
manner in which interest was
being computed, but all his
complaints fell on deaf ears.
He said that Plaintiff was
charging interest upon interest
which he felt was wrong. It was
also D.W.1’s evidence that he
engaged a Chartered Accountant
to study the statement of
account and his finding
confirmed the fact that
Plaintiff charged interest upon
interest (Exhibit “G”)
The position of the law, and
this is common knowledge, is
that for every case there is a
burden of proof to be discharged
and the party who bears this
burden will be determined by the
nature and circumstances of the
case.
Our Evidence Decree, 1975 (N.R.C.D
323) provides for two kinds
of burdens to be discharged in
proving a case. The legal
burden or burden of persuasion
is simply put, the obligation
imposed on a party by a rule of
law to prove a fact in issue.
And whether a party has
discharged this burden and
proved a fact in issue will be
determined at the end of the
case, when both parties have
called all their evidence.
There is also the burden of
producing evidence sufficient
enough so that on all the
evidence a reasonable mind can
conclude that the existence of
the fact is more probably than
its non-existence. The party
who bears the legal burden on a
particular issue will also bear
the evidential burden on that
issue. To discharge the burden
of proof and succeed on an issue
therefore, the evidence adduced
by the party must in the opinion
of the court be more cogent or
convincing than that adduced by
his opponent. The general rule
is also that where a case is of
a civil nature, the standard of
proof shall be by the
preponderance of probabilities.
It is trite learning that he who
alleges must prove. This
general principle as enunciated
in Ababio v. Akwasi III
[1994-95] Ghana Bar
Report, Part II, 74 is that
a party whose pleadings raise an
issue essential to the success
of the case assumes the burden
of proving such issue. However
as stated by Justice Mensa
Boison JA in the case of
Acquaye v. Awotwi [1982-83] 2GLR
110, the testimony of a
plaintiff is presumptive
evidence which is rebuttable.
The well-known rule of evidence
is that although proof in a
civil case rested on the
plaintiff, that burden was
discharged once the plaintiff
had introduced sufficient
evidence of the probability of
his case. It would then rest on
the defendant to rebut the
plaintiff’s evidence. Thus in
Re Ashalley Botwe Lands:
Adjetey Agbosu & Ors v. Kotey &
Ors [2003-04] SCGLR 420, it
was held as follows:
“....the burden of producing
evidence in any given case was
not fixed, but shifted from
party to party at various stages
of the trial depending on the
issue (s) asserted and/or
denied.”
So what evidence did the
Plaintiff adduce? P.W.1, Dora
Ocquaye-Nortey’s evidence was
that, Defendant was granted a
first facility of GH¢8,000.00,
which was paid off by the
Defendant. An amount of
GH¢20,000 was subsequently
granted to the Defendant. This
facility expired on 5th
July, 2006 but Defendant had
failed to retire this facility.
P.W.1 tendered in evidence a
statement of account (Exhibit
“E”) which showed the balance
outstanding as at November
30,2009 as GH¢91,213.38. P.W.1
also tendered in evidence, the
report (Exhibit “G”) of the
Chartered Accountant engaged by
the Defendant, Richard Owusu
Afriyie and Associates, to go
into accounts.
As I have already stated,
Defendant’s defence was that the
fact that Plaintiff charged
interest upon interest i.e.
compounding of interest, was
wrong. Compounding of interest
is the capitalisation of
interest so that interest itself
yields interest. See Kitchen
v. HSBC Bank PLC [2000] 1 AII ER
(comm.) 787,CA. In England,
there has been a removal of the
former prohibition on compound
interest, nonetheless the law
has traditionally leaned against
it. A clear manifestation is
the well established rule in the
law of mortgage that, in the
absence of special agreement,
simple interest only can be
charged in a mortgage account;
Daniell v. Sinclair [1881] 6
App. Cas. 181, PC. This
principle was applied by the
Court of Appeal in holding that
a mortgage under which the
mortgagor covenanted to pay to a
mortgagee bank all monies due:
“So that interest shall be
computed according to the
agreement or falling agreement
to the usual mode of the bank”
did not entitle the bank to
charge compound interest,
notwithstanding evidence that it
was the bank’s practice to do
so; See Bank of Credit
and Commerce International
SA v Blattner (20 November
1986, unreported) Court of
Appeal (Civil Division)
transcript No.117 of 1986.
In Ghana, the Court (Award of
Interest and Post Judgment
Interest) Rules, 2005 (C.I.52)
states in Rule (1) as follows:
“ Rule 1 – Order for
payment of interest.
1.
If
the court in a civil cause or
matter decides to make an order
for the payment of interest on a
sum of money due to a party in
the action, that interest shall
be calculated.
a.
At
the bank rate prevailing at the
time the order is made, and
b.
At
simple interest
But where an enactment,
instrument or agreement between
the parties specifies a rate of
interest which is to be
calculated in a particular
manner the Court shall award
that rate of interest calculated
in that manner”.
Thus in Ghana the law permits
compounding of interest but only
under an arrangement between the
parties to do so; i.e. there
should be mutual agreement.
Under the normal rules parties
are entitled to charge simple
interest.
So, what was the agreement
between the parties herein? The
case of the Plaintiff was that
the facilities extended to the
Defendant by offer letters dated
22nd March 2006 and 4th
May, 2006 provided that interest
on the facility would continue
to accrue until final payment.
The offer letters were tendered
in evidence as Exhibits “C” and
“D”.
Exhibits “C” and “D”, the offer
letters, in my opinion, give
sufficient information to
suggest that interest is to be
compounded. The said exhibits
made it clear as to the mode of
calculation of the interest
which was at the end of every
month; if the interest payable
is not paid it is added to the
principal therein until final
payment of the facility. In the
offer letter dated 4th
May, 2006, (Exhibit “D”),
paragraph 2 of page 2, under
“Special Conditions of Lending,
“there is a provision that the
facility shall attract an
interest at the rate of 5% per
month per 30 day period of the
amount approved. The offer
letter dated 22nd
March, 2006 tendered and marked
as Exhibit “C” also contains the
same provision provided at page
2, paragraph 2 under “Special
Conditions of Lending”. There
is a further provision that the
Plaintiff may at its discretion
roll over the facility for a
further period of 14 days and
charge a commission at the rate
of 9.5% per month until the
facility was fully retired.
From Exhibits “E” and “1”, it is
clear that interest was
compounded. The first facility
of GH¢8,000 together with
interest was paid in accordance
with the compound method of
interest calculation. It is
therefore not open to the
Defendant to contest the method
of calculation of interest on
the second facility.
The Defendant’s dispute of the
balance, as already stated,
resulted in the appointment of
Accountants by the Defendant to
go into accounts and establish
the actual balance due on the
facility. The audit report,
Exhibit “G” expressed the view
that the Plaintiff compounded
interest and that this method of
calculating interest should be
by agreement between the
parties. As I have stated it is
my opinion that the offer letter
(Exhibits “C” and “D”) indicated
that interest was to be
compounded and the Defendant
accepted this term by signing
and returning the offer letter
to Plaintiff. I will therefore
find that it was a term of the
agreement that interest would be
compounded.
The Accountants/Auditors
concluded in their report
(Exhibit “G”) that:
“Subject to the above mode of
calculation of interest, we did
not find any issues which
brought about serious
differences between the two
parties’ balances. The loan
amount granted by City
Investment Company Ltd and the
repayment made by Wesamos were
not in doubt. The major issue
between the parties is the
interest charges.”
Having made a finding that it
was a term of the loan agreement
that interest would be
compounded, I will now look at
the Plaintiff’s claim. It is my
opinion that Plaintiff has
adduced cogent and sufficient
evidence to prove its case. The
result is that the burden of
proof shifted to the Defendant
to show why Plaintiff should not
succeed in its claim. In my
opinion, Defendant did not lead
sufficient evidence to
substantiate its claim that it
owed Plaintiff an amount of GH¢13,000
as principal.
On the totality of the evidence
adduced therefore, I will find
that Plaintiff has sufficiently
established its claim and is
therefore entitled to its
claim. I therefore order that
Defendant pays the sum of GH¢54,202.75
to Plaintiff, together with
interest at the contractual rate
of 5% per month from 27th
October, 2008 up to and
inclusive of the date of the
final payment.
Costs assessed at GH¢2,000.00
against Defendant.
(SGD)
BARBARA
ACKAH-YENSU (J)
JUSTICE OF
THE HIGH COURT
COUNSEL
KOFI PEASAH BOADU
- PLAINTIFF
- DEFENDANT
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