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The first
defendant company a customer of
plaintiff bank for more than ten
years applied for and was
granted an overdraft facility of
Gh¢30,000 and a medium term loan
of Gh¢40,000 on 4th July 2007 to
complete the construct of a cold
store and also purchase a
generator to service the cold
store owned by 1st defendant at
Mankessim in the Central region.
Plaintiff averred that the
overdraft facility attracted
interest of 23% per annum over
twelve months and the medium
term loan was for 36 months at
the interest rate of 23% per
annum, and in event of default,
a penal interest of 10% per
annum. Plaintiff contends that
by executing the agreement,
defendants agreed to the terms
of the agreement and the
plaintiff's right to charge
compound interest on the various
facilities advanced. Plaintiff
realized in 2009 that 1st
defendant was having difficulty
repaying the facility and upon
consultation with the customer,
entered into a Credit facility
Agreement dated 20th May 2009
with the customer by which the
overdraft facility was renewed
and increased to Gh¢40,000 for
twelve months. 1st defendant's
debt due and owing in respect of
the medium term loan was also
restructured and spread over 48
months to expire on 31st July
2013 to enable defendant pay up.
The facilities granted
defendants were secured with a
legal mortgage over a house the
property of 2nd defendant and
floating charge over the assets
of the company. 1st defendant
failed to make the monthly
installments as agreed by the
terms of the Credit Banking
Facility which was tendered in
evidence as exhibit A. Though
2nd defendant was served with
the requisite notices to make
good their indebtedness,
defendants failed to liquidate
their debts which stood at Gh¢115,406.60
as at 7th July 2009. In their
reply and defence to defendants'
counterclaim, plaintiff averred
that defendants were always
furnished with statements of
their accounts informing them of
position of their indebtedness.
Plaintiff denied that the
transaction was harsh and
unconscionable. Plaintiff
contends that they have suffered
losses as a result of the
failure of defendant to settle
their indebtedness and has sued
defendants jointly and severally
for the following reliefs; a.
Recovery of the sum of GH¢115,406.60
being the amount due and owing
in respect of the various
banking facilities advanced to
1st defendant as at 7th
July2009. b. Interest on Gh¢115,406.60
at plaintiff's penal default
interest rate of 10% in excess
of the prevailing lending rate
at the time being charged by
plaintiff per annum from 8th
July 2009 until and inclusive of
the date of final payment and or
in the alternative; c. An order
for the judicial sale of all the
assets(present and future)
comprised in the floating charge
dated 16th October 2007
registered and executed in
favour of plaintiff d. An order
for the judicial sale of the
property known as number 1 Block
51 situated at Okyir-Ekyir, off
Ajimako road Mankessim mortgaged
to plaintiff to secure the
various facilities advanced to
the 1st defendant. e. Damages
for breach of contract f. Costs
g. Any further or other orders
that the court would deem fit.
Defendants do not deny taking
the facility from plaintiff in
the terms specified in the
agreement. Defendants disputed
the quantum of indebtedness and
counterclaimed that the terms of
the loan are harsh and
unconscionable. In furtherance
of this allegation, defendants
counterclaimed that a court of
equity ought to give them relief
by re-opening the transactions
and relieve the defendants of
the payment of excessive
interests pursuant to section 1
(1) of the Loans Recovery Act,
1918 (CAP. 175). The sole issue
set down for trial after parties
failed to settle at pre-trial
conference is "whether or not
the plaintiff is entitled to its
claim as endorsed on the writ of
summons". The Evidence Act
1975(NRCD 323) imposes a duty on
the party who asserts to prove
the assertion on a preponderance
of probabilities. Also in
Zabrama vrs. Segbedzi [1991] 2
GLR the Court of Appeal stated
that where a person's assertions
are denied by his opponent, he
has a burden to establish that
his assertion is true and he
discharges this burden by
leading admissible and credible
evidence from which the facts he
asserts can be properly
inferred. The plaintiff who
asserts that defendants are
indebted to them as per the
endorsement on the writ of
summons has the onus to lead
admissible and credible evidence
to establish their claim.
Plaintiff was represented at the
trial by Mr. Edward Kwadjo Anane,
Relationship Manager of the
Small and Medium enterprises
Division of the Bank who
tendered in evidence exhibit A,
the Credit Facility Agreement
dated 20th May 2009 and executed
by the parties. The witness also
tendered in evidence exhibit B
the Legal Mortgage dated 25th
November 1996 executed by 2nd
defendant over her house
situated at Mankessim and
exhibit C the title deed dated
6th June 2001 in respect of 2nd
defendant's property and exhibit
D the Floating Charge created
over the assets of 1st defendant
dated 6th October 2008. The
witness admitted under cross
examination that defendants have
received and liquidated previous
facilities granted by plaintiff.
He however denied a suggestion
from counsel that 2nd defendant
was illiterate. The witness also
testified that the bank
performed due diligence and was
satisfied that the defendant
could make the monthly
installments based on the cash
flow projections in her
application. Since defendant is
disputing the quantum of their
indebtedness, the onus is on
plaintiff to produce sufficient
evidence to establish their
claim. Plaintiff's claim as
endorsed on the Writ IS for Gh¢15,
406.60. In my view, the
defendants' statement of account
is relevant in ascertaining the
level of indebtedness. It is the
duty of the Bank to keep
statement of accounts of its
clients showing the level of
their indebtedness. Plaintiff
however failed to produce a
statement of the defendants
account in support of their
claims. Asked in cross
examination how the bank arrived
at the balance of Gh¢115,406.60
endorsed on the writ, the
witness explained as follows;
"every facility attracts
interest and if it is an
overdraft facility, the interest
is compounded on daily basis and
at the end of the month the
accrued interest is lumped unto
the balance outstanding. If it
is a medium term loan it also
attracts interest on a daily
basis and then at the end of the
month whatever interest that had
accrued over the months is also
added unto the outstanding
indebtedness of the customer.
Once the customer is not paying,
interest would definitely pile
up to that point." The witness
also testified that the
overdraft facility was always
drawn to the hilt. This
testimony was unchallenged and
it is not in dispute that under
exhibit A where there is default
the plaintiff had the right to
charge compound interest. Though
plaintiff averred in paragraph 9
of the statement of claim that
the debt due and owing on the
medium term loan was Gh¢43,890.0.O,
Exhibit A the loan agreement
which plaintiff is relying as
the basis for their claim did
not specify the amount due. And
plaintiff also failed to lead
evidence on the outstanding
amount due on the medium term
loan which was restructured
under exhibit A Neither did
Plaintiff lead evidence on how
much of the amount endorsed on
the writ constitutes the
principal sum and have much
constitutes interest. In the
absence of a statement of
accounts the question is what is
the exact amount due and owing?
Plaintiff tendered in evidence
exhibit E a letter from
defendants indicating their
acceptance of the overdraft
facility of Gh¢40,000 for 12
months and a medium term loan of
Gh¢33,928.61 for 48 months plus
accrued interest. Accordingly I
find that the outstanding amount
on the medium term loan is Gh¢33,928.61
plus accrued interest. 2nd
defendant testified on behalf of
defendants. She told the court
that she has been a customer of
the plaintiff bank for about ten
years. She admitted that in
2007, she applied for and
obtained the said facilities for
the expansion of her business.
She told the court that she used
the money for paneling her new
cold store and also bought a
cold store machine as well as a
generator to service the cold
store. She testified that the
money she took from the bank was
not enough and after equipping
the store she did not have money
to start the business. Though
she informed the plaintiff about
her challenges they did nothing
about it. She testified that she
has paid a total of Gh¢1,740.00
representing one year seven
months and since the proceedings
commenced she paid Gh¢12,000 to
the plaintiff. See exhibits 1
1a-L. The witness however
admitted under cross examination
that she still owes the bank on
the overdraft facility and the
restructured medium term loan.
After tendering exhibit E (the
letter written by defendants
accepting exhibit A) through 2
nd defendant, the following
transpired under cross
examination; Q Mrs. Hagan, so
have you liquidated your entire
indebtedness regarding the
overdraft facility as well as
the loan Ans My lord I have paid
Gh¢1,740 for 1 year and 7 months
and before coming to court I
paid an amount and the receipts
are with my lawyer. Q The Gh¢1,740
you paid was the monthly
installment for the medium term
loan is that right Ans Yes my
lord, that is for the money that
was given to me. Q Do you have
any receipts to show for any
repayment regarding the over
draft facility Ans My lord the
bank deducts interest at the end
of every month Q. Have you
finished paying Ans No my lord.
Q So you owe the bank Ans Yes my
lord. It is not in dispute that
defendants were granted the
facilities in exhibit A subject
to the terms and conditions
specified therein. It is also
not in dispute that the
facilities were secured by
exhibits B, and D. Neither is it
in dispute that defendants have
not liquidated their
indebtedness. From the evidence
before the court I find that
defendants have defaulted in
liquidating their debt. I also
find that the defendant has paid
a total of Gh¢13,740.00 in
respect of the medium term loan.
By their own showing they have
not made any payments in respect
of the overdraft facility. I
will now consider whether or not
the facility granted is harsh
and unconscionable in terms of
the revised Loans Recovery Act
1918 (CAP175). Under exhibit A
the overdraft facility attracted
interest at the rate of 32%
(i.e. GCB base rate of 26% plus
6%). The agreement also provided
that in event of default the
facility shall attract a penal
interest rate of an additional
10% or any other rate to be
determined by the Bank from time
to time. The relationship
between the parties date as far
back as 1996 when plaintiff
secured loans granted defendants
with a legal mortgage. The
evidence also shows that in all
her previous dealings with the
defendant evidenced in Exhibits
B. C, and D, 2nd defendant had
signed all the documents. There
is no evidence before me that
2nd defendant did not appreciate
any of these documents and
needed assistance before signing
them. I find 1nd defendant's
claim that she cannot read or
write as being without merit and
not supported by the evidence.
Exhibit E is an acceptance
letter dated 26th May 2009
signed by 2nd defendant on the
letter-head of 1st defendant.
This exhibit corroborates
plaintiff's claim that by
accepting the facility,
defendant agreed to pay compound
interest charged on the facility
in event of default In deciding
whether or not a transaction is
harsh and unconscionable, the
court would take into
consideration the degree of
distress, inexperience or
ignorance of the borrower, his
peculiar circumstances, and the
relationship between the lender
and the borrower. See Poncione
vrs Higgins (1904) 21 TLR 11 and
also 22 Albion Street
Westminster Hanyet Securities
vrs. Mallet & Anor. (1967) 3 All
ER 943. Also in Carrington Ltd.
vrs. Smith, (1906) 1 KB 79 the
court took the position that
where the defendant understood
the transaction and willingly
entered into the agreement, then
although interest may be
excessive the transaction would
not be considered harsh or
unconscionable. In that case,
the interest was about 75%, yet
the court found that the loan
particularly benefited the
defendant and ruled that the
transaction was not
unconscionable. Plaintiff in the
instant case is a company
registered under the Companies'
Code and carries on the business
of banking which includes
lending money. Defendants, who
have had previous dealings with
plaintiff completely understood
the terms of the agreement and
the consequences of default
before accepting same by signing
it. For these reasons I find no
merit in the allegation that the
transaction is unconscionable,
in coming to this Conclusion, I
am guided by the decision of the
court of appeal in Poku vrs GCB
[1989-90] 2 GLR 37 where the
court held that where the terms
of a contract have been reduced
into writing, the court would
interpret them to give effect to
the intentions of the parties.
On the totality of evidence
before me I hold that plaintiff
has discharged the burden of
proof.I find defendants jointly
and severally liable and
accordingly enter judgment for
the plaintiff. I hereby order
recovery of the sum of GH¢33,928.61
plus accrued interests as per
Exhibit A. It is further ordered
that interest be calculated on
the overdraft facility as per
Exhibit A from 8th July 2009
until date of final payment. In
default, I order the judicial
sale of the property known as
number 1 block 51 situated at
Okyir- Ekyir of Ajimako road
Mankessim and all assets stated
in the floating charge dated
16th October 2007. I award
damages of 1,000 against
defendants for breach of
contract. Cost of 1,000 against
defendant. COUNSEL: MR. FRED
DOTSE FOR PLAINTIFF - PRESENT
MR. KWEKU PAINTSIL FOR DEFENDANT
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