HOME

IN THE HIGH COURT OF JUSTICE ACCRA COMMERCIAL DIVISION,

THE 23^RD DAY OF JANUARY 2007.

                                           JONES OTCHERE

                                                      VRS.

                           1)      ELI PHARMACEUTICALS

                           2)      DELALI BREMPONG

                            3)      ROLAND TETTEH

 MARGARET INSAIDOO J (MS).

JUDGMENT ON INTEREST

The Plaintiff's claim was for the sum of 11,655 pounds and ¢ 105,600,000.00 and 258 pounds being principal and interest of financial assistance given to 1 st and 2^nd Defendants together with interest from 1 t^h January 2005 to date of payment and costs.

During the course of the trial, the 1^st and 2^nd Defendants submitted to judgment on the principal sums of 48 million cedis and five thousand five hundred pounds. They however disputed the interest. The Plaintiff came by way of an application on notice to amend the endorsement on the writ of the summons and statement of claim pursuant to order 16 rules 5 of CI. 47.

This was not objected to by the Defendants and subsequently the court granted the leave to amend and they have filed on amended writ of summons and endorsement on 16^th January 2007. The issue for the determination was the interest. So the claim now reads the sum of ¢48 million, 5,500 pounds, 258 pounds, interest on the ¢48 million cedis at simple interest per month from 16^th January 2005 to date of final payment and interest of 5,500 pounds simple interest from 1 t^h February 2005 till date of final payment and costs.

The Defendants position in the matter is that the financial assistance of £5,500 was given to them by the Plaintiff for a period of 6 months at a simple interest rate of 10%. Further the Defendants contended that the financial assistance of 48 million cedis was for a period of one month at a simple interest rate of 10%.

In contrast, the Plaintiff contends that the 10% interest was to be levied monthly for the' period stated in the MOU and based on the understanding that the Defendant would settle their obligations within that period.

Evaluation of Evidence

The Plaintiff in his evidence testified that he resides in both London and Accra. He said that he had known the (3^rd Defendant) Roland Tetteh for 26 years, and that they used to attend the same church and fellowship.

It was Roland Tetteh who introduced the 2^nd Defendant MR BREMPONG to him.

On 15^th Jan 2005, Mr. Tetteh informed him that he was in a business partnership with Mr. Brempong, but that they had problems with capital, after a chat with the 2^nd Defendant and 3^rd Defendant, he agreed to help. He eventually paid a total of 48 million cedis to the defendants, for the purpose of "clearing imported pharmaceutical products"

They signed an MOU, and the interest was stated as 10% and I refer to the 10 of the proceedings of 1st Nov. 2001.

            Q.         Do you remember the terms of the MOU?

            A.         Yes, it was 10% per month.

The MOU was tendered as Exhibit "A", Secondly, he offered another financial assistance in the sum of 9,865 dollars, Exhibit "C" and Exhibit "0" was tendered to show that a transfer that made from the Plaintiff's U.K Abbey national account an amount of 9,865 dollars or its pound equivalent of £5,500.

This is reflected in the proceedings of 1/11/2005, O. "that you signed an agreement for 5,500 pounds out of this transaction, why is it that the amount here is $9,8657"

A. "It is because the money was transferred from a pound account and it represents this figure we see here. That is $9,865 equals 5,500 pounds at the time."

Thirdly, Plaintiff had to go in for an overdraft because the Defendants failed to refund his 48 million cedis to him on the D-Day. He thus incurred charges amounting to 2885 pounds.

Exhibit "E" supports the Plaintiff's assertion that the two Defendants had agreed to pay the overdraft charges of 258 pounds.

The Plaintiff evidence was not shaken in any way during cross-examination. He was very candid to the court and in my view a credible witness. He said that the 48 million cedis was for a period of one month at a simple interest rate of 10%. However he testified that when the repayment exceeded that month, the defendants assured him that "even it takes a year, they would pay the interest'.

A)                 "I trusted the 3rd defendant so much so I did not even touch the document. I left everything for them to do. As a matter of fact it was even when I submitted the document to my lawyer that we found out that the contents were not right. I trusted them so much that I left them to do most of the things, so it was when I was giving the document to my lawyer that my attention was drawn to it.

B)                  So you want this court to believe that you did not appreciate the terms of the MOU before you signed it?

C)               I can accept that because in life we make mistakes so to that effect I would admit that I made a mistake.

The Evidence of the 2^nd Defendant, Delali Brempong was that he was a Pharmacist by profession, and director, pharmacist of the 1 sl Defendant Co. Eli pharmaceuticals he confirmed that Mr. Tetteh, introduced the plaintiff to him. He testified that the Plaintiff gave the 48 million at 10% interest per annum (page 3 of Proceedings of 9 November 2006). He added that they would also share the profits.

The Witness under cross-examination disputed his signature on the MOU but on the whole, he agreed that the interest should be paid on the facilities because they could not be paid within the time they had promised.

Evidence of Roland Tetteh

He testified that he was a banker. That he had known the Plaintiff since 1979 and the 2^nd Defendant for some 3 years and the 1^st Defendant since 2000.

In his testimony, he confirmed that the Defendants took the sums of 48 million cedis and $9,865 from the Plaintiff. Further he said Exhibit 'A' and 'c' the MOU were signed by 2^nd Defendant, Mr. Brempong and witnessed by him, Mr. Tetteh. He testified to the Court that he drafted the document. That the signatories were the Plaintiff and the 2^nd Defendant and the document was witnessed by him. He said that the agreement was executed at the Shangari La Hotel where the Plaintiff was residing.

During cross examination, he confirmed that the money was given to the Defendants before the MOU was signed but that the MOU captured the terms of the said agreement.

MR. Tetteh's testimony was that the parties intended that the interest should be 10% simple interest on a monthly basis. He was quite emphatic on that point. On page 38 of the proceedings of 10^th December, 2006; he said that:-

"That the amount of to be paid was to be paid with 10% interest, I remember very well for condition was that 10% interest would be paid on monthly basis."

Roland Tetteh who initially was the 3^rd Defendant had his name later struck off the writ of summon by consent of the parties and he testified that he was the author of the MOU and that although the intentions of the parties was that 10% interest should be paid monthly over the six months, that intention was captured in the MOU. On the issue of the interest of 48 million cedis the Defendant was amenable to the payment of simple interest at 10% for the one month. It was the defendant's understanding that if it was unable to payoff the debt after the one month the commercial rate of interest would therefore be exigible.

Mr. Tetteh

A. The period for six months meant the usage of the money and it was to be recycled but the interest was to be 10 percent per month.

Q. . Why did you not express the intention to him? I am suggesting to you that the import of this agreement is that the 10 percent was agreed after 6 months?

A. I can accept it if the money was not for a simple interest unfortunately the couching of the word did not capture all as such."

The Plaintiffs therefore urged this court to hold that the interest rate agreed upon was 10% simple interest per mensem; and tha1 the Plaintiff is entitled to that interest on the sums which the defendant admits that he owed until date of final payment.

The questions that arise are:-

1)     What interpretation does the world of commerce put on the expression "Simple Interest?"

Is it per annum or per month?

If it was per month does it means that the Plaintiff is putting himself out as a moneylender?

Exposition of the Law

Interest is payable when the parties' agree in their financial dealings that it should be paid. This is because it is the policy of the law to give effect to contracts genuinely and freely entered by parties. The parties' intention is embodied in a contract. The agreement may be express or implied as was stated in the case of Ghana Commercial Bank V. Odoom [1975]2GLR 54. CA

Definition

Black's Law Dictionary, 6^th Edition defines interest as "the compensation allowed by law or fixed by the parties for the use or forbearance of borrowed money".

Oxford Advanced learners Dictionary, 6^th Edition defines Interest as "that which is paid on the original amount of money that you invested, and not on any interest that it has earned".

Black's Law Dictionary, 6^th Edition defines Simple interest as "that which is paid for the principal or sum lent, at a certain rate or allowance made by law on agreement of parties. Interest calculated on principal where interest earned during periods before maturity of the loan, is neither added to the principal nor paid to the lender".

The Glossary Of financial terms defines simple interest as the method of computing interest on the principal sum where the interest rate is applied only to the original amount and is used in contrast to the compound interest.

Ghana Commercial Bank V. Odoom [1975]2GLR 54.CA

FACTS

By a specially endorsed writ, the appellants claimed from the respondent in the High Court the sum of ¢11 ,831.95 being the balance of overdraft granted to the respondent plus ten per cent interest on the amount from 25 September 1967 up to and inclusive of the date of final payment. Although the respondent entered appearance to the writ he took no further part in the proceedings. Acting under Order 14 of L.N. 140A, the trial judge gave judgment for the appellants on the principal sum and invoked the provisions of Order 13, r. 3 of L.N. 140A and awarded five per cent interest on that sum for seven and a half months. The appellants appealed against both the rate and the period of interest and the questions for determination were whether or not the appellants' claim to interest was satisfactorily proved and if proved the basis for calculating the rate of interest.

Under section 98 of the Courts Act, 1971 (Act 372), a court was empowered to award interest at such rate as the Chief Justice might, after consultation with Minister responsible for Justice, by legislative instrument determine on any sum claimed and found by the court to be due and such interest was, unless otherwise directed by the court, to be calculated from the date on which the claim arose. Up to the time of delivery of this judgment no such instrument had been made.

Held, dismissing the appeal:

(1) The general rule was that interest was recoverable as a debt in cases: (a) where it was payable under a contract either express or implied from the usage of the trade; or (b) where statute had fixed the rate at which it was payable.

(2) Unless the particular rate had been fixed by statute or delegated legislation, the court must be assisted by evidence of the overdraft agreement of the parties; evidence of the current bank interest rate; and evidence of knowledge or acquiescence on the part of the customer in a system of the bank charging compound interest at an agreed or reasonable rate on his overdraft account. Dictum of Lord Hanworth M.R. in Inland Revenue Commissioners v. Holder [1931] 2 K.B. 81, C.A. considered.

(3) From the review of pleadings in the case it was clear that there was no proof of any agreement between the parties fixing the rate of interest at ten per cent or the customer's knowledge or acquiescence in the rate of compound interest claimed. Pappoe v. Bank of British West Africa (1933) 1 W.A.C.A. 287 distinguished.

In the book entitled the Law of Interpretation in Ghana, By S.Y Bimpong-Buta, it was stated that in Biney v. Biney , the Court of Appeal laid down three basic rules of construction of deeds and documents, namely:

I)                                 The construction must be as near to the mind and intention of the author as the law would permit;

II.              The intention must be gathered from the written instrument itself; and

                  iii.              Technical words of limitation will have their strict legal effect.

"We may add to these three basic rules, a fourth rule, namely that a document must be read as a whole in order to arrive at the true intention of the maker."

Ascertainment of the intention

"It is well-settled law that in interpreting the words of a statute or in construing the words of a document, the court's first duty is to ascertain the intention behind the words as expressed. Consequently, whilst one would view the expression legislative intention in terms of the legislative purpose or whatever meaning one may place on the expression, the courts must, when confronted with issues of interpretation, ascertain that legislative intention. How does the court ascertain this legislative intention? It does so by considering the words as expressly or impliedly stated in the enactment in question and not by reading the legislative intention into the enactment. In the words of Francois JSC in his opinion in support of the Supreme Court majority decision in Kuenyehia v. Archer:

"In interpreting the relevant provisions of the Constitution, we must be very careful to avoid importing into the written document what does not appear herein. For there could be no difficulty, if an extension was intended as a desired result, for it is to be explicitly expressed, in precise terms. Rules of construction do not permit, a passage which has a clear meaning, to be complicated or obfuscated by any interpolation, however well intentioned."

Acquah J.A. in Republic v Regional Lands Officer, Ho; ex parte Kludze also said:

"The language of [article 36 (8) of the 1992. Constitution is so clear and unambiguous that it would be outrageous to read into it what is not stated therein. "

The Court of Appeal case Allan Sugar (Products) Ltd vs. Ghana Export Co. Ltd [1982-83] GLRD 91

said per (Francois JA as he then was) said that:

"ft is no function of the court to rewrite an agreement for the parties by inserting terms that would have been beneficial but were overlooked especially when such an interpolation would amount to an interference with a thirty party's bargain."

"In this case, the National Investment Bank (NIB) were the owners of 200 acres of irrigated farmland. They entered into two sale agreements in respect of the land. Under the first agreement, they sold 50 acres of the land to the plaintiff­company. Nothing was said in the agreement about the plaintiffs' entitlement to the use of the irrigation facilities installed on the land. However, in the subsequent sale, the NIB sold the remaining 150 acres of the land to the defendant-company together with the exclusive use of the irrigation system. Subsequently, the plaintiffs sued claiming that they, as sugar-cane growers, were also entitled to the use of the irrigation facilities ..

The High Court had erred in not taking into account the negotiations between all the parties and the government as to their need for the use of the irrigation facilities prior to the conclusion of the sale agreement between the NIB and the defendants. In dismissing the appeal, the Court of Appeal held that although the events and surrounding circumstances preceding an agreement could be considered in ascertaining the real intentions of the parties to the agreement, once the parties had reduced their intentions into writing (as in the instant case) they would be held to their written word and the use of extraneous matters such as antecedent or subsequent negotiations could not be resorted to in construing the agreement between the NIB and the defendants, except in cases of genuine doubt."

"In Asona Building Co. Ltd vs. Akers,[1977J2GLR 90,CA; is also a case In point.

In the case of Standard Chartered Bank Ghana Ltd, [1998-99) SCGLR PAGE 812-813, it was held by the court that:

(4) "Interest might be awarded by a court under the following circumstances:

(i)  By the custom or trade practice. Such interest was usually awarded on moneys due and payable upon proof of such custom or trade practice. Pappoe v. Bank of West Africa [1933J 1 WACA 287 cited;

(ii) By agreement in transactions between parties where such interest might become payable upon action brought after default. Senedza v. Djokotoe [1991J 2 GLR 81 cited;

(iii) Interest charges arising out of contracts - usually stated or implied; and (iv) by (a) statute arising under the Money Lenders Ordinance, Cap 176 (1951 Rev.) or (b) the Courts (Award of Interest) Instrument, 1984 (Ll1295) which has now been overtaken by CI. 52. In the instant case, the Court of Appeal had rightly awarded interest on the damages for conversion at the prevailing bank rate from November 1982 to the date of judgment in December 1992 in terms of LI 1295."

CONCLUSIONS

In the instant case, the documentary evidence points to an interest rate of 10 % simple interest on the transactions. The documents are quite clear and unambiguous. Although the plaintiff and PW3 testified to the fact that it was the intention of the parties that the effect of that statement"10% simple interest" meant 1 0% simple interest per month; the 2^nd defendant obviously denied that this was the intention. It is my respectful view that the plaintiff did not wholly discharge the burden of proof required of him by the Evidence Decree, sections 11 and 12 .

.

The Evidence Decree Section 11 (1 )For the purposes of this Decree, the burden

of producing evidence means the obligation of a party to introduce sufficient evidence to avoid a ruling against him on the issue.

(4) In other circumstances the burden of producing evidence requires a  party to produce sufficient evidence so that on all the evidence a reasonable mind could conclude that the existence of the fact was more probable than it non-existence.

Section 12

(1) "Except as otherwise provided by law, the burden of persuasion requires proof by a preponderance of probabilities. "

(2) "Preponderance of the probabilities means that degree of certainty of belief in the mind of the tribunal of fact or the court by which it is convinced that the existence of a fact is more probable than is non-existence."

On the evidence adduced before me, it is more probable that the parties intended that the interest rate would be at 1 0% per annum and not per mensem. I am fortified in my conviction by the holding of (Francois JA as he then was) that:

"It is no function of the court to rewrite an agreement for the parties by inserting terms that would have been beneficial but were overlooked especially when such an interpolation would amount to an interference with a  thirty party's bargain."

In the case of Osei V. Ghanaian Australian Goldfields Ltd, 2003-2004 SCGLR 73,Wood JSC held that:-

"The above construction does, in our view, conform to the basic rules of construction of documents, namely, that the interpretation or construction must be nearly as close to the mind and intention of the maker as possible; and the intention must be ascertained from the document as a whole, with the words used being given their plain and natural meaning and within the context in which they are used."

BLACKSON v. G.R.O. [2006] 4 M.L.R.G. P. 201

On practice of court where there is in existence a written document over a transaction.

" It has been well established that where there is in existence a written document over a transaction, the practice in this court is to consider both the oral and the documentary evidence but more often to lean favourably towards the documentary evidence which is found to be authentic: See Ouah v. Yorkwa (1993-94) 1 GLR 217, Hayford v. Egyir (1984-86) 1 GLR 682, Nsiah v. Attuahene (1992-93) 2 GBR 897." Per Anim, J. A. [P.220] lines. 5 - 15

I also rely on Biney v Biney and construe the words in their normal meaning and usage.

I therefore hold that the expression "simple interest'; contained in the exhibits "A" and "c" meant simple interest per annum. Indeed, if I were to hold otherwise, it will mean that the plaintiff would be entitled to an interest of 120% per annum! This will be clearly contrary to the provisions in the Moneylenders Ordinance, Cap 176

Section 13(1)  On an unsecured loan where the interest exceeds the rate of 30 per cent per annum or the corresponding rate in respect of any other period, the Court, notwithstanding any native law or custom to the contrary, shall unless the contrary is proved, presume for the purposes of section3  of the Loans 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 Court under that section where the Court is satisfied that the interest charged, although not exceeding the rates mentioned in this section, is excessive. "

Equity will not allow this. The interest rate that is charged is the inherent cost. If indeed, the plaintiff intended to offer assistance, as he intimated to this court then why would he charge an interest of 120% per annum when the commercial banks at that time had a lending rate of 30% per annum? Clearly, this is incompatible with his claim that he was helping a friend in difficulty! It is clearly excessive and unconscionable.

Finally, the applicable rate of interest on the sum of 48 million cedis would be as claimed in his endorsement 10% simple interest per annum for the period of one month. Thereafter, after the period for repayment had lapsed, then the applicable rate would be at the prevailing bank rate with effect from 16^th January 2005 till the date of final payment in accordance with C.1.52. Similarly, the applicable rate on the 5,500 pounds would be at the simple interest of 10% per annum up to the six months as pertaining in the MOU and thereafter, when the amount became due at the bank rate applicable to sterling with effect from 1 i^h January 2005 till date of final payment. The holding of Date-Bah JSC in the case of Butt V. Chapel Hill properties [2003-2004] SCGLR 639 applied

THE COURT (AWARD OF INTEREST AND POST JUDGMENT INTEREST) RULE; 2005 C.I. 52 applied.

The amount of two hundred and fifty-eight pounds (£258) being bank charges on the overdraft that the Plaintiff had to incur is also to be paid by the Defendant.

Costs of twenty-five million cedis (¢25,000,000.00) awarded to the Plaintiff.

MARGARET INSAIDOO J (MS) (SGD)