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JUDGMENT
The Plaintiff, Maye Kom Na Mehwe
Onyame Cloth Sellers Association
has issued a writ against the
Defendants with the following
reliefs endorsed on it.
i)
Repayment of an amount of 366
million cedis representing 26
weeks of 15 million cedis
amounting to 390 million cedis
out of which 24 million cedis
was paid.
ii)
Interest on the above amount at
the current bank interest rate
from 29th of August
2007 to date of payment.
iii)
Any other reliefs that may seem
fit by this honourable court.
From the pleadings, the case of
the Plaintiff is that Plaintiff
was a welfare association of
market traders which among other
welfare functions borrowed money
from commercial banks for the
benefit of its accredited
members. 1st
Defendant was a member of
Plaintiff Association who had
benefited from this arrangement
on a number of occasions in the
past and was granted on or about
the 3rd of October
2006, financial assistance of
500 million cedis (GH¢50,000)
out of a bulk loan granted to
the Plaintiff Association by a
commercial bank for the benefit
of its members. The 2nd,
3rd and 4th
Defendants stood as guarantors
for the 1st
Defendant. The whole
transaction was reduced into
writing and per the agreement
the 1st Defendant was
expected to repay the loan by 52
equal weekly installments of 15
million cedis per week. The 1st
Defendant paid 26 weeks but
stopped making payment leaving
26 weeks unpaid, amounting to
390 million cedis out of which
24 million cedis was
subsequently paid leaving a
balance of 366 million cedis
(GH¢36,000).
The Defendants, on the other
hand, averred that the President
of the Plaintiff Association,
Joana Ewurabena Ocran was a
money lender who gave out loans
without a license and therefore
the whole transaction should be
declared null and void.
Defendants did not deny that 1st
Defendant obtained the loan in
question but contended that the
said loan and other previous
loans were obtained from Joana
Ewurabena Ocran who approached
her and told her that she
obtained loans from commercial
banks and on-lent to members of
the association at the same
interest rate charged by the
banks. Defendants also
enumerated in detail the other
transactions of similar nature
that 1st Defendant
entered into with Plaintiff
Association; in all the said
cases 1st Defendant
honoured the agreements and
repaid the debts. 1st
Defendant’s further contention
was that she was not a member of
Plaintiff Association.
Defendants contended further
that the conduct/acts of the
Plaintiff’s President, Joana
Ewurabena Ocran, constituted
fraud in that Joana Ocran,
amongst others, had devised
Plaintiff Association to use as
a vehicle in order to circumvent
the sanctions imposed by the
Moneylenders Act, 1941, Cap
176. Defendants are thus
alleging that the loan
transaction in question is void,
illegal and unenforceable in
terms of the Money lenders Act.
Defendants also contended that
the terms, interest and charges
levied on the loan transaction
were harsh, excessive and
unconscionable in terms of the
Loan Recovery Act, (Cap 175).
The Defendants have therefore
counterclaimed for the
following:
a.
A declaration that this loan
transaction is void, illegal and
unenforceable in terms of the
Moneylenders Act, 1941 (Cap
176).
b.
An order setting aside the loan
transaction for being tainted
with and/or procured by fraud.
c.
An order setting aside the loan
transaction for being tainted
with and/or procured by fraud.
Or in the alternative
d.
An order re-opening the loan
transaction on the ground that
the interest and charges levied
by the Plaintiff on the loan
transaction is excessive, harsh
and unconscionable in terms of
the Loans Recovery Act, Cap 175.
e.
An order setting aside the loan
transaction for being harsh,
excessive and unconscionable.
Plaintiff has denied Defendants’
assertions particularly that
Joana Ewurabena Ocran created
Plaintiff Association as a
device of fraud, albeit
Plaintiff admits that the said
Joana Ewurabena Ocran is the
President of the association.
Plaintiff averred that 1st
Defendant is an accredited
member of Plaintiff Association
having formally applied to
become a member and having been
accepted as a member. Plaintiff
denies making any false
representation to 1st
Defendant and states that 1st
Defendant was fully aware of the
fact that apart from the
interest charged by the creditor
bank, there were other charges
and fees payable to the bank as
well as other expenses that were
incurred by the Plaintiff.
Plaintiff further denies that it
is a moneylender and averred
that the Moneylenders Act did
not apply to it since it only
dealt with its members.
From the pleadings therefore,
the fact that Joana Ewurabena
Ocran is the President of
Plaintiff Association is not in
dispute. The fact that Plaintiff
Association obtained loan
facilities from commercial banks
is also not in dispute.
The following issues were set
down for determination at the
trial:
1.
Whether or not the 1st
Defendant owes the amount
claimed on the writ.
2.
Whether or not the Plaintiff is
a Moneylender.
3.
Whether or not the transaction
is illegal void and unforceable
and should be set aside.
4.
Whether or not the interest and
other charges levied on the loan
were harsh, excessive and
unconscionable.
5.
Whether or not Plaintiff is
entitled to the reliefs on the
writ.
6.
Whether or not Defendants are
entitled to their counterclaim.
7.
Whether or not the 2nd,
3rd and 4th
Defendants are equally liable
for the indebtedness of the 1st
Defendant.
Joana Ewurabena Ocran (P.W.1)
the President of the Plaintiff
Association gave evidence on
behalf of the Plaintiff
Association and called two (2)
witnesses – an Executive Member
of the Plaintiff Association,
Alice Ankrah (P.W.2), and a bank
official of Ghana Commercial
Bank, Francis Amoo (P.W.3.).
Joana Ocran’s evidence was that
1st Defendant had
been a member of the Plaintiff
Association since the year
2000. She tendered in evidence
the application form that 1st
Defendant allegedly completed to
become a member of the
association, and which was
witnessed by her husband, Alex
Assenso, as exhibit “C”. Her
further evidence was that 1st
Defendant received from
Plaintiff, a facility of
¢500,000,000.00 (GH¢50,000.00)
which was part of a bulk loan
that Plaintiff obtained from
Ghana Commercial Bank. The 2nd
and 3rd Defendants
were 1st Defendant’s
sisters and the 4th
Defendant was 1st
Defendant’s daughter; they
guaranteed the said facility.
Per the agreement between
Plaintiff and 1st
Defendant, exhibit “A”, 1st
Defendant was to pay
¢15,000,000.00 a week for 52
weeks together with interest and
all expenses related to the
facility. 1st
Defendant however only paid for
26 weeks amounting to
¢390,000,000.00 after demands
were made on 1st
Defendant she paid an additional
¢24,000,000.00 leaving an
outstanding balance of
¢360,000,000.00 (GH¢36,000.00).
According to Joana Ocran prior
to the 1st Defendant
taking the facility in question,
she had taken several facilities
from Plaintiff Association and
its sister Associations, which
facilities she had fully repaid.
1st Defendant led
evidence on behalf of the
Defendants. Her evidence was
that the president of Plaintiff
Association, Joana Ocran, went
to her shop in the year 2003 and
told her that she had an
association through which she
lent money and that the money
she lent was at the same
interest rate as that of the
banks. Her further evidence was
that she received loan
facilities of ₵100,000,000.00
and ₵400,000,000.00
respectively, which loans she
paid off. Joana Ocran offered 1st
Defendant another facility of
one billion cedis from Ahenfie
Cloth Sellers Association, a
sister association. It is
therefore clear that 1st
Defendant had taken a number of
facilities from Plaintiff before
this problem which brought the
parties to court, and I will so
find.
1st Defendant’s
evidence was that she did not
finish paying off the ¢1 billion
when Joana Ocran offered her
another facility of
¢500,000,000.00. She said that
she paid ¢15,000,000.00 as
processing fee, ¢5,000,000.00 as
collateral fee, ¢5,000,000.00 as
legal fee and she paid
¢75,000,000.00 in advance for
five (5) weeks. 1st
Defendant refuted the
President’s claim that she had
been shown documents from Ghana
Commercial Bank; she said she
had never attended any meeting
of the Association.
1st Defendant’s
further evidence was that it was
one Alice Momo Badu who went to
her and told her that she had
been sued for defaulting in
paying back the loan and at the
trial it came out that the
interest rate they were being
charged was far in excess of the
prevailing bank rate. 1st
Defendant because of this
refused to pay the outstanding
balance on her loan because she
felt she had over paid the
Association.
Apart from the evidence of 1st
Defendant, Defendants called as
a witness, Andrew Kojo Asamoah
(.D.W.1) who described himself
as a Valuer. In my opinion his
evidence was of no probative
value because his main testimony
was that he was a professional
member of the Ghana Institute of
Surveyors, and tendered in
evidence a copy of the
“professional scale of fees”
from the Ghana Institute of
Surveyors. I find his evidence
irrelevant to the issues that
arise in the instant suit.
Defendants also called as a
witness, the Registrar of the
Commercial Court (D.W.2) to
produce the recorded evidence of
P.W.2 in another case, “Royal
Beneficiaries v Esther Okailey
Asare” (exhibit “14”). In my
opinion, exhibit “14” did not
establish the Defendants’
contention that P.W.2 was not a
member of Plaintiff Association,
and that she had never received
any facility as a member, and I
will so find.
The husband of 1st
Defendant, Alex Asenso (.D.W.3)
also gave evidence. The crux of
his testimony was that the
signature on exhibit “C” as a
witness/proposer of 1st
Defendant was not his. He said
he was not the one who completed
and signed that portion of
exhibit “C”; i.e. the
application form completed by 1st
Defendant. He was not even in
Ghana on the date indicated
therein; he was in the USA. He
tendered in evidence the
relevant pages of his Canadian
passport (exhibit “15”). He
said he left Ghana in July 1999
and returned on 21st
February 2003.
I will now take the issues set
down for determination one by
one. The first issue is whether
or not the 1st
Defendant owes the amount
claimed on the writ. Plaintiff
as already indicated, is
claiming an amount of
¢366,000,000.00 (GH¢36,000.00)
representing payments for 26
weeks of ¢15,000,000.00 per week
which amounts to
¢390,000,000.00. Out of this
amount, Plaintiff stated that
she had paid ¢24,000,000. By
the agreement entered into by
the parties, exhibit “A”, the 1st
Defendant was expected to repay
the loan of ¢500,000,000.00 by
52 weekly installments of
¢15,000,000.00 per week. This
is not in contention. Exhibit
“A” states so, the Plaintiff per
its President testified so, and
1st Defendant herself
admitted this under
cross-examination. This is what
she said:
Q: Look at Exhibit “A”, is
that not the agreement covering
the amount that you took?
A: That is so
Q: By that agreement were
you not expected to pay 52 weeks
of ¢15,000,000.00?
A: That is so my Lord.
By the said agreement therefore,
1st Defendant was
expected to repay the loan by 52
equal weekly installments of
¢15,000,000.00 per week. Out of
these 52 weeks it is not in
dispute that 1st
Defendant paid 26 weeks leaving
26 weeks unpaid. This is what 1st
Defendant said under
cross-examination.
Q: You were expected to pay
52 weeks of ¢15,000,000.00. How
many weeks did you pay?
A: I paid 26 weeks.
Q: So you were left with
another 26 weeks to pay is that
not so?
A: Yes my Lord.
Q: Have you paid the 26
weeks which amounts to
¢390,000,000.00?
A: I paid ¢12,000,000.00
out of 26 weeks outstanding.
Q: And I suppose you paid
another ¢12,000,000.00?
A: I can’t recollect.
From the above 1st
Defendant herself accepted that
out of the 52 weeks she was
expected to repay the loan she
took, she paid 26 weeks leaving
a balance of 26 weeks unpaid,
amounting to ¢390,000,000.00.
Plaintiff’s contention is that 1st
Defendant made a further payment
of ¢12,000,000.00 which payment
1st Defendant herself
did not recall. I will accept
Joana Ocran’s evidence that 1st
Defendant paid an additional
¢12,000,000.00. I will
consequently find that 1st
Defendant does indeed owe
Plaintiff the amount being
claimed.
In my opinion however, the real
issue is not whether or not 1st
Defendant owes the amount being
claimed. Her contention is that
having found out that she had
been paying interest in excess
of what the Bank was charging
the Association her position was
that she had over paid the
Plaintiff and should therefore
not pay the outstanding balance
on the loan facility in
question.
The next issue for
determination, and probably the
most crucial issue, is whether
or not the Plaintiff is a
moneylender. Before I delve into
the evidence adduced by the
parties in support of their
various positions however I will
discuss the subject of money
lending.
By definition, and as contained
in section 29 of the
Moneylenders Act, 1941 Cap 176
(The Laws of Ghana (Revised
Edition) Act 1998 (Act 562);
formerly section 2 of the
Moneylenders Ordinance, the term
“Money lender” applies only to
persons whose business is that
of money lending. Section 1 of
the Act (formerly section 3 of
the Ordinance) also provides as
follows:
“Except as provided in paragraph
(a), (b), (c), (d) and (e) of
the definition of “moneylender”
in section 29, a person who
lends money at interest or who
lends a sum of money in
consideration of a larger sum
being repaid is, for the
purposes of this Act, a
moneylender until the contrary
is provided.”
Thus whether a transaction
amounts to money lending or not
is a question of fact. The
initial onus is on the borrower
to establish either of the
elements stated in section 1 of
the Act;
1.
that the amount said to be owed
includes interest charged;
2.
that the amount to be repaid
exceeds the money lent.
The essence of the Moneylenders
Act is to protect borrowers.
The consequences of non
compliance with the provisions
of the Act are that the
transaction is prohibited and
void. See Bassil v. Raad
[1961] GLR 155.The Plaintiff
can only avoid these
consequences if it falls within
the exceptions found in section
29.
The case of Plaintiff herein is
that it is a welfare association
engaged originally in activities
of welfare nature such as
supporting members in times of
bereavement, marriage or giving
out gifts to institutions such
as Osu Children’s home. Along
the line it was realized that
individual members had
difficulty in accessing loans
from banks and therefore the
banks were prepared to give bulk
loans to the Plaintiff
Association for the benefit of
its members. The President,
Joana Ocran’s evidence was
corroborated by Alice Ankrah
(P.W.2) whose evidence was that
she was a member of the
Association and also it’s
Assistant Secretary.
A General Manager in charge
Small-Medium Enterprises
Division of G.C.B with the
Circle Branch, Francis Amoo, was
called as a witness by Plaintiff
(P.W.3). His evidence was that
he had sat in meetings of the
Association. The Bank, he stated
had been dealing with the
Association as a group through
its President. The General
Manager in charge of Support
Services Division, Tony Ofori
Badu (D.W.4) who was called as a
witness by Defendants, also
testified that he was the
Relationship Manager for
Plaintiff and its sister
associations. Under
cross-examination, he testified
that he had no doubt about the
fact that Plaintiff existed as
an association with members. I
have already made a finding that
P.W.2 was a member of Plaintiff
Association. I will further find
that Plaintiff Association only
granted facilities to members of
the Association.
Defendants’ case however is that
1st Defendant is not
a member of Plaintiff
Association. The evidence of 1st
Defendant was that the signature
on the membership application
form, exhibit “C” was not hers.
Alex Assenso (D.W.3) who was
purportedly the witness
(proposer) also testified that
the signature on exhibit “C” was
not his. The evidence of the
Police Forensic Officer, Bukari
Yakubu, was a bit conflicting
and I am a little confused as to
whether or not his evidence was
that the signature of Alex
Assenso on exhibit “C” was his
or not. However the Report which
was tendered in evidence as
Court Exhibit “1” stated that:
“It is highly probable that
subject ALEX ASSENSO could not
have authored the subject
signature allegedly representing
him on exhibit “C”. His further
evidence was that the signature
of Alex Assenso in exhibit “17”
(a Financial Assistant Agreement
and Undertaking Form) was
actually that of Alex Assenso.
I will accept the report of the
Police Forensic Officer, and
also the evidence of Alex
Assenso and find that the
signature in exhibit “C” is not
that of Alex Assenso. But to me
that is neither here nor there.
And why do I say so? First and
foremost this does not in any
way prove that 1st
Defendant was not a member of
Plaintiff Association, or that
Plaintiff did not exist as an
Association. The evidence
placed before the Court, which
evidence 1st
Defendant did not refute, was
that it was 1st
Defendant who collected the form
and brought it back. In my
opinion therefore, if the
signature of Alex Assenso was
indeed forged Defendants have
not proved that it was forged by
Plaintiff or its President.
Apart from the application form
which 1st Defendant
is said to have completed, Joana
Ocran also tendered in evidence
(exhibit “A”), the “FINANCIAL
ASSISTANCE, AGREEMENT AND
UNDERTAKING FORM” which 1st
Defendant completed when she was
granted the loan for
GH₵50,000.00. In the said
exhibit, she is described as a
member of Plaintiff Association;
and it is the same description
in the agreements for other loan
facilities granted to 1st
Defendant; for example, exhibit
“17”.
I must state here and now that I
do not believe 1st
Defendant’s evidence that the
signature in exhibit “C” is not
hers. I am wondering why 1st
Defendant did not apply for her
signature to be also sent for
verification by the Police
Forensic Department? I will
therefore find that the
signature in exhibit “C” is that
of 1st Defendant. 1st
Defendant did not lead any
evidence to the effect that the
signatures on the loan
agreements forms tendered in
evidence (exhibits “A”, “F” and
“17”) were not hers. Indeed, she
herself testified that she
benefited from a multiple of
facilities from Plaintiff. I
will find that 1st
Defendant is a member of
Plaintiff Association and that
she received loans from
Plaintiff Association as a
member.
The fact that Plaintiff
Association is registered as a
company limited by guarantee is
not in dispute. The nature of a
company limited by guarantee is
that no issuing of shares is
allowed, neither is it allowed
to make profit. It is usually
set up to enable members of a
quasi charitable and friendly
societies to take advantage of
the benefits of corporate status
which includes easy access to
credit facilities. Such a
company is exempted under
section 29(c) of the Money
lenders Act if it is able to
establish that a loan
transaction was incidental to
its main business. If the
essence of the transaction was
to assist the main business then
it is not caught by the
mandatory provisions under the
Act. However if the lending is
found to be a separate business
in addition to the main business
then this provisions of the Act
would apply.
The case of Litchfield v.
Dreyfus[1906] 1K.B. 584
illustrates the subtle
differences distinguishing
transactions which fall under
and outside the provisions the
Moneylenders Act. Section 29(c)
of our Act is similar to section
6(d) of the English Moneylenders
Act of 1900. In the Litchfield
case, the main business of the
Plaintiff was as an art dealer.
He retired and continued in
business as an expert art valuer
and advisor. Whilst in business
he discounted bills for friends
and business colleagues and
after retirement continued to do
so for business colleagues. He
never advertised nor dealt with
outsiders. The Court held that
it had never been a money lender
and fell within the exception.
Similarly in the case of the
Official Assignee of the
Property of Koh Hor Khoon and
Others, Bankrupts v. E.K. Liong
Hin Ltd [1960] 1 All ER, 440,
the provisions of Singapore
Moneylenders Act contained
provisions similar to section 29
of our Act. It excludes “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”.
The Plaintiff in the said case
lent money because it was afraid
it would lose its customers and
took iron sheets as Security.
The Court held that the loan
transaction undertaken was
genuinely for the purposes of
preserving, advancing or
otherwise assisting the
company’s business though not
necessary undertaken in
connection with its primary
objects. They were made for the
purposes of that business and
within the exception to the
definition of “money lender”.
The above position is contrasted
with the case of Premor Ltd
v. Shaw Bros [1964] 2 All ER 583
where a finance company
issued cheques to borrowers who
issued cheques of higher amounts
in repayment. The rate of
interest exceeded 60%. The
loans were said to be secured on
cars which never existed. The
issue was whether section 6 (d)
of the Money lenders Act of 1900
(same provisions as section 29
(c) of our Act) applied. Citing
Koh Hor Khoon (supra)
the Court held that the
transaction was not linked to
any specific car nor linked to
hire purchase at all. The
object of the transaction was to
benefit from the exorbitant
interest charged. Denning M.R
laid out the test for a
moneylender seeking refuge under
the exception as follows:
“The question in this case is
whether the finance company
brings itself within that
exception (d). The first
requirement is that it should
carry on a business not having
for its primary object the
lending of money”. I think that
it satisfies that
requirement….it bonafide carried
on the business of a hire
purchase finance company. So
far so good. But the second
requirement is that the lending
of the money must be “in the
course of” that business; and
the third requirement is that it
must be “for the purpose of that
business.”
In my opinion, Plaintiff has
sufficiently satisfied the Court
that it has fulfilled the three
requirements stated by Denning
M.R. to fall into the exception,
namely that;
1.
It carries out business not
having money lending as its
primary objective.
2.
The money was lent in the course
of the Plaintiff Association’s
business.
3.
The lending was the object of
promoting and helping the
business of its members.
Nonetheless that is not
sufficient to determine whether
or not Plaintiff or the
president of Plaintiff
Association is a money lender.
The question to ask is, did the
Plaintiff lend money to the 1st
Defendant in consideration of a
larger sum being repaid? If it
is established that even on one
occasion, there is a presumption
that Plaintiff is a money lender
(Section 1 of the Money lenders
Act). The initial onus is on 1st
Defendant (the borrower) to
prove that Plaintiff either lent
the money at an interest or in
consideration of a larger sum
being repaid. Defendants’ case
appears to be that since the
aggregate of the loan repayment
by the 1st Defendant
was greater than the bulk loan
given to 1st
Defendant, Plaintiff is a
Moneylender.
Defendants’ case is that the
interest rate applicable to the
loan granted by GCB to Plaintiff
was less than that applied to
the facility passed on to the 1st
Defendant. Exhibits “2” and
“2A” are the Loan Facility
letter and Loan Repayment
Schedule from GCB. These
exhibits disclosed that
Plaintiff took a loan of 4
billion Cedis at an interest
rate of 26% per annum repayable
in 52 weekly installments and
the actual money repayable as
the interest, representing the
26% per annum, according
Defendants is ¢552,443,716.54.
The Bank charged a facility fee
of ¢40,000,000.00 which is 1% of
the principal and processing fee
of ¢1,000,000.00. Counsel
contends further that out of
this loan “with this far lower
interest rate and charges by the
bank” the Plaintiff gave a loan
of ¢500,000,000.00 to the 1st
Defendant repayable at weekly
installments of ¢15,000,000.00
for 52 weeks which totaled
¢780,000,000.00. Thus the
interest Plaintiff charged on
the loan was ¢280,000,000 which
is more than half of the total
interest charged by the bank on
the loan of 4 billion cedis.
Joana Ocran’s evidence in
rebuttal, which was corroborated
by P.W.2, is that the Plaintiff
did not charge interest on the
facilities it on-lent to its
members; she said what the
members paid was the interest
the Bank charged the Association
and the cost of or expenditure
incurred on-lending to the
members. For instance, 1st
Defendant did not provide any
security for the facility she
received and the Association had
to look for adequate security
for the bulk loan from GCB and
so it passed on the expenses
incurred to the members,
including 1st
Defendant. The evidence of both
Joana Ocran and P.W.2 was that
the members had to go to the
Association’s lawyer after their
facility had been approved and
pay 1% of the amount received to
the lawyer as processing fee
before collecting their cheques
from the lawyer.
The evidence of P.W.3, an
Officer from GCB, was that in
addition to the interest charged
by the bank they charged a
processing fee and a facility
fee. There was also a provision
for 10% payment in case there
was a default. There is also
the payment for valuation of the
property (ies) used as
collateral, and the plotting and
stamping of the legal documents;
all these have to be paid for by
Plaintiff Association. The
payments may also include the
ledger fees payable at the
branch where the Plaintiff’s
account is. The Officer from GCB
who was called as a witness by
Defendants, D.W.4, also
testified under
cross-examination that facility
fee and/or charges would
normally be charged in addition
to the interest.
In my opinion Plaintiff has
successfully established that
the Association did not charge
interest or make profit on the
loans it on-lent to its members,
and I will so find. In any
case, there is judicial
authority that the Moneylenders
Act was not intended to apply to
every person who lends money at
an interest. Indeed in
Yeboah v.Bofour [1971] 2GLR at
201, Azu Crabbe JSC was
emphatic that:
“The Moneylenders Ordinance
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 only to
a person who really carries on
the business of money lending as
business.”
I have already made a finding
that Plaintiff Association was
formed to offer assistance to
its members who are largely
traders at the Makola Market.
The Association as a collective
body could access bulk sums of
money from the Bank to the
benefit of its individual
members. It is believed that
the arrangement was not only
beneficial to the members of the
Association but also convenient
to the creditor bank in the
opinion of P.W.3. Thus, in
Ahenfie Cloth Sellers
Association v. Philomena Mensah
Civil Appeal No. H1/36/2007
(unreported), the Court of
Appeal, based on the fact that
the plaintiff in that case
obtained the bulk loan from a
creditor bank and passed it on
to its members together with
some charges ( made up of
interest and other charges and
fees from the bank, and also
expenses incurred in the course
of obtaining the loan from the
creditor), held that the
plaintiff could not be deemed to
be a moneylender under the
Moneylenders Act, and that the
plaintiff was exempted by
section 29 (c) of the Act.
I will find that the Plaintiff
Association is not a money
lender within the purview of
section 29 (c) of the
Moneylenders Act, and will so
hold.
Issue No. 3 is whether or not
the transaction is illegal, void
and unenforceable. The
Moneylenders Act (Cap 176) and
the Loans Recovery Act, 1918
(Cap 175) seek to protect
borrowers from exploitation and
apply to any transaction which,
whatever its form maybe, is
substantially one of
moneylending. The consequence of
non-compliance with the
provisions of the said Acts is
that the transaction would be
declared illegal and
unenforceable. Thus if I had
made a finding that the
Plaintiff was a moneylender
doing business as a moneylender
without a license, then the
transaction would be declared
void ab initio and
therefore illegal and
unenforceable. But since my
finding is that Plaintiff was
not a moneylender the issue of
the transaction being illegal
and unenforceable does not
arise.
Defendant however has made a
further allegation that the
conduct/acts of the Plaintiff’s
president, Joana Ocran,
constitute fraud. Defendant
particularized the fraud in
paragraph 31 of the Statement of
Defence & Counterclaim as
follows:
a.
That Joana Ewurabena Ocran
through the Plaintiff obtained
loan from Ghana Commercial Bank
in the name of the Plaintiff at
a far lower interest rate of 26%
per annum.
b.
That Joana Ewurabena Ocran made
fraudulent misrepresentation to
the 1st Defendant
that the interest charged on the
loan by Ghana Commercial Bank
was 56%.
c.
That Joana Ewurabena Ocran
charged higher interest on the
loan given to the 1st
Defendant without lawful
authority so to do.
d.
That Joana Ewurabena Ocran
engaged in the business of
moneylending under the disguise
of association.
e.
That Joana Ewurabena Ocran
dishonestly deviced the
Plaintiff as moneylending
vehicle in order to circumvent
the sanctions imposed by the
Moneylenders Act, 1941, Cap 176.
f.
That Joana Ewurabena Ocran took
advantage of the 1st
Defendant’s need and made a
fraudulent misrepresentation to
her which influenced her to
enter into these illegal, void
and unconscionable transaction
for the benefit of the Plaintiff
and/or its President Joana
Ewurabena Ocran.
What amounts to fraud has been
settled by the decision of the
House of Lords in the celebrated
case of Derry v Peek [1889]
144 App. Cas. 337 at 374,
where Lord Herschell stated as
follows:
“Fraud is proved when it is
shown that a false
representation has been made (1)
knowingly, or (2) without belief
in its truth, or
(3) recklessly, careless whether
it be true or false. Although I
have treated the second and
third as distinct cases, I think
the third is but an instance of
the second, for one who makes a
statement under such
circumstances can have no real
belief in the truth of what he
states. To prevent a false
statement being fraudulent there
must I think, always be an
honest belief in its truth and
this probably covers the whole
ground, for one who knowingly
alleges that which is false has
obviously no such honest
belief.”
It is trite learning that a
party who alleges fraud must
clearly and distinctly prove the
fraud he alleges. It is also
trite learning that even in a
civil action a higher standard
of proof is required than that
required in proving ordinary
civil matters. “A civil court”,
said Denning L.J. , “when
considering a charge of fraud
will naturally require a higher
degree of probability than that
which it would require if
considering whether negligence
were established” (Bater v
Bater [1950] 2 All ER, 458).
Thus the onus probandi in
the instant case was on the
Defendants to prove their case
as alleged in their Statement of
Defence and Counterclaim.
However for all the reasons
discussed above, it is my
opinion that the Defendants
failed to do so. I have made a
finding that Plaintiff is a
welfare association with Joana
Ewurabena Ocran as its
president. Therefore Joana
Ewurabena Ocran’s conduct/acts
were done as the president of
Plaintiff Association. I have
also made a finding that
Plaintiff is not a moneylender.
I will therefore find that
Defendants have not established
that Joana Ewurabena Ocran’s
conduct/acts constitute fraud.
As for issue no. 4, at this
point it would be a mere
academic exercise to discuss it,
but I will do it all the same.
The issue is whether or not the
interest and other charges
levied on the loan were harsh
excessive and unconscionable. As
part of the jurisdiction to
grant relief against
constructive fraud, courts of
equity have acted to protect
persons in cases in which it was
apparent, from the intrinsic
nature and subject of the
bargain itself, that it was one
which no man in his right senses
and not under delusion would
make on the one hand, and no
honest and fair man would accept
on the other; in fact, an
inequitable and unconscionable
bargain. The principle has now
been extended to all cases in
which the parties contracting do
not meet on equal terms, and
applies to all persons under
pressure without adequate
protection; and the onus of
supporting the transaction is
thrown on the person benefiting.
The principle of unconscionable
dealing looks to the conduct of
the stronger party in attempting
to enforce or retain the benefit
of dealing with a person under a
special disability in
circumstances where it is not
consistent with equity or good
conscience that he should do so.
The adverse circumstances, which
may constitute a special
disability for the purposes of
the principles relating to the
relief against unconscionable
dealing may take a wide variety
of forms and are not susceptible
to being comprehensively
catalogued.
In Blomley v Ryan [1956] 99
CLR 363 at 405, Fullagar J
listed some examples of such
disability as; “poverty or need
of any kind, sickness, age, sex,
infirmity of body or mind,
drunkenness, illiteracy or lack
of education, lack of assistance
or explanation, where assistance
or explanation is necessary.” As
Fullagar J remarked, the common
characteristic of such adverse
circumstances “seem to be that
the effect of placing one party
at a serious disadvantage vis
a vis the other.
In the Ghanaian case of City
Investment CO. Ltd v Print
Consult Ltd & Anor [1990-2000] 1
GLR 640, Dordzie J held that
although as provided under
section 3(1) of the Loans
Recovery Ordinance Cap 176 (1951
Rev) the plaintiff, a body
corporate was excluded from the
definition of “moneylender”,
section 3(1) of the Loans
Recovery Ordinance empowered the
court in proceedings before it
for “the recovery of money lent”
to reopen the transaction where
there was evidence which
satisfied the court that the
interest charged in respect of
the sum actually lent was
excessive, and that the
transaction was harsh and
unconscionable, or was such that
a court of equity would give
relief. And since the
proceedings before her involved
the recovery of money lent by
the plaintiff to the defendant,
the said section 3(1) was
applicable.
However, in the instant suit I
will find that the transaction
cannot be said to be harsh or
unconscionable because I have
found that the additional
payments members made on the
facilities on-lent to them by
the Plaintiff cannot be termed
as interest.
So, is the Plaintiff entitled to
the reliefs on the writ? I will
say, yes! As already stated, 1st
Defendant has not refuted that
the amount being claimed is
outstanding on the facility she
took. All she is saying is that
she did not think she should be
made to pay the said amount
because the president of
Plaintiff Association had
defrauded her. I have made a
finding that Defendants have not
established fraud and that the
transaction was neither illegal
nor void.
I will also find that 2nd,
3rd, and 4th
Defendants are equally liable
for the payment of the debt owed
to Plaintiff. They stood as
guarantors, and exhibit “A”
shows that they appended their
signature as guarantors and also
have their pictures embossed on
the agreement. There has been no
denial anywhere of this fact,
and they themselves never
appeared at the trial to deny
this. In the circumstances I
will find that they are jointly
and severally liable for the
payment of the amount being
claimed by Plaintiff, and will
so hold.
As indicated, Defendants have
counterclaimed. In the light of
all the findings I have made, I
will find that Defendants are
not entitled to their
counterclaim and dismiss same.
In conclusion, I will hold that
Plaintiff is entitled to the
repayment to it by Defendants of
the amount of 366 million Cedis
(GH¢36, 600. 00), together with
interest at the current bank
interest rate, from 29th
August 2007 until the date of
final payment.
Costs assessed at GH¢3,000.00
against Defendants.
(SGD)
BARBARA ACKAH-YENSU (J)
JUSTICE OF THE HIGH COURT
COUNSEL
F. K. YEBOAH
- PLAINTIFF
GEORGE ABORGAH -
DEFENDANTS |
