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JUDGMENT:
The Plaintiff, per its lawful
attorney, has sued the
Defendants herein for the
following:
1.
An
order for the repayment of the
sum of GH¢139,097.54 being the
defendant’s outstanding
liability on the facility
granted to the Defendants.
2.
Interest on the above sum as
agreed calculated up to 30/06/08
and to date of final payment.
3.
Cost
on a full indemnity basis
including cost of prosecuting
this action.
The Plaintiff’s case is that
pursuant to an application for a
credit facility by 1st
Defendant, Plaintiff granted 1st
Defendant two (2) facilities.
The first facility was an
overdraft of GH¢80,000 approved
on 2/3/2005. The second was a
loan facility of GH¢50,000.00
approved on 23/5/2005. The
Plaintiff’s further case is that
1st Defendant
defaulted in the repayment of
these facilities and after
consistently reneging on its
promises to repay the facility,
the 1st Defendant
wrote to the Plaintiff
apologising and requested that
the outstanding balances on the
two facilities be consolidated
and the amount treated as a loan
spread over a period so that the
1st Defendant could
repay within the said period.
Consequently on September, 2006,
the Plaintiff approved a credit
facility of GH¢136,000.00.
Defendants however defaulted
again in the repayment of the
said facility and as at 30/06/08
the outstanding indebtedness of
the Defendants stood at
GH¢139,097.54.
Per the pleadings, the
Defendants’ case is that when
the 1st Defendant
applied for an overdraft
facility of GH¢50,000.00 from
the Plaintiff sometime in 2005,
it took the Plaintiff a very
long time to notify Defendants
that the facility had been
granted. Hence by the time the
1st Defendant was
notified of the grant, the
facility had been “eaten up” by
the interest calculated by the
Plaintiff. It was also the
Defendants’ case that no bank
statements were issued to them
despite repeated demands for
same.
It was the Defendants’ further
case that sometime in 2006,
without consulting Defendants
the Plaintiff consolidated and
restructured Defendant’s loans.
Defendants averred that they had
been making payments to the
Plaintiff without the bank
providing them with statements
to enable them reconcile their
accounts. It is also the
Defendants’ case that “the
interest exacted on the facility
is unconscionable and
extortionate”.
It is trite learning that the
party who raises an issue
essential to the success of his
case assumes the burden of
proving it. The burden however
shifts to the defence only to
lead evidence to tip the scale
in his favour when on a
particular issue the Plaintiff
leads some evidence to prove his
case.
In the instant case the
Plaintiff has alleged that the 1st
Defendant wrote to apologize for
their default and in support of
this Mr. Richmond Aboagye (PW1),
the Branch Manager of the
Takoradi Branch of Plaintiff
Bank at the time 1st
Defendant was granted the
facilities in question, tendered
in evidence the letter signed by
the Managing Director, 2nd
Defendant (Exhibit “C”).
Plaintiff also alleged that it
was the Defendants who requested
the Bank to consolidate the
outstanding balance on the loan
accounts and to spread payment
over twenty-four (24) months.
P.W.1 tendered in evidence the
letter (Exhibit “D”) in support
of this assertion. P.W.1 also
tendered in evidence, the
facility letter covering the
restructuring (Exhibit “E”). In
Plaintiff’s approval letter,
Exhibit “E”, the total of the
facility was stated as
GH¢136,000.00. P.W.1’s evidence
was that after the
consolidation, the company still
defaulted in repayment and the
facility was restructured to
enable the 1st
Defendant Company pay the debt
but 1st Defendant
continued with the default
resulting in an outstanding
balance of GH¢211,000.00 as at
the date P.W.1 gave evidence.
P.W.1 denied the Defendant’s
assertion that before the 1st
Defendant Company could access
the facility which was approved
the principal had been “eaten
up” by the interest which had
accrued. His evidence was that
before 1st Defendant
Company accessed the facility
there was no interest
calculation because before
acceptance of the terms and
condition and utilization of the
funds, there was no contractual
agreement for Plaintiff to base
any deductions on.
With these pieces of evidence,
the burden of proof shifted to
the Defendants to lead evidence
to tip the scale in their
favour.
The 2nd Defendant
gave evidence and said as
follows:
Q: Who consolidated the
loan and the overdraft?
A: The Plaintiff
Q: Did they consult you?
A: No my Lord I was not
consulted.
Q: When did you receive
your first bank statement since
you took the loan?
A: The very day they
consolidated the loan and
overdraft and notified us. We
agreed that we owed them that
amount because on that same day
that they gave us the statement.
Q: What year was that?
A: 2007
Q: And when was the loan
given?
A: 2005
Q: When did he receive the
very first bank statement from
the bank?
A: 2007, I received the
first statement from the
Plaintiff.
Q: The Plaintiffs have
referred to a letter dated 3rd
June 2008 in which they say that
yourself and the 3rd
Defendant gave them the
authority to sell some
possessions of the company how
did that come about?
A: We received a letter
from Skipcom Company indicating
that the Plaintiff said we owe
them and that they should sell
some of our properties.
Initially we thought it was a
scam and followed up to Skipcom
office. When we went to Skipcom
office, in the course of the
discussions this issue came up
as to the fact that we should
write a letter or make an
undertaking. This undertaking
was drafted by an officer of
Skipcom and that we did not sign
this undertaking on our
freewill.
Under cross-examination this is
what the 2nd
Defendant said:
Q: Has Skipcom
taken any of your items?
A: No my Lord.
Q: When did you finish
paying your loan?
A: It was when I received
the first statement and I
realized that I have overpaid
the facility I received from the
Plaintiff besides that they
rescheduled the facility.
Q: So what you are saying
is that before the loan was
rescheduled you had finished
paying your debt with the bank?
A: That is so my Lord.
In the apology letter earlier
referred to, 2nd
Defendant wrote amongst others
as follows:
“The company is therefore
pleading to your institution to
kindly convert the outstanding
debt into loan and spread it on
flexible terms of payment for
the company to operate and pay
at the same time.
Hoping our apology will be
accepted and request for the
flexible payment will be
accepted in good faith.”
The said letter was dated 13th
March, 2006. Exhibit “D”, a
letter dated 7th
September 2007 with the heading
“Reconsideration of Repayment of
Loan”, was signed by 2nd
Defendant and a Director,
Stephen Owusu. In the 2nd
Defendant’s evidence in chief,
he made reference to a letter
dated 3rd June 2008
in which the 2nd and
3rd Defendants
authorized Plaintiff to sell
some of 1st
Defendant’s properties. 2nd
Defendant’s evidence was that an
officer of Skipcom drafted an
undertaking and pressurized him
into signing the undertaking
i.e. the said undertaking was
signed under duress.
I fail to appreciate the link
between the said undertaking and
the letter of apology in which 2nd
Defendant admitted that 1st
Defendant was in default, and
also that requesting for a
consolidation of the loan and
overdraft facilities. For a
start, the dates are very
different. The apology letter
was dated 13th March,
2006, “the request for
consolidation dated 7th
September, 2007; and the said
undertaking was said to have
been drafted sometime in 2008.
It therefore cannot be a fact
that the 2nd
Defendant was pressurized into
writing the letter of apology
and Defendants have not proved
that it was Plaintiff itself
that did the consolidation
without Defendants’ knowledge or
consent. Exhibits “C” and “D”
prove that Defendants were aware
that they had defaulted as far
back as 13th March
2006, when they wrote the letter
of apology.
It was also P.W.1’s evidence
under cross-examination that
Plaintiff stopped sending
statements to 1st
Defendant when their account
became dormant. That means that
1st Defendant had not
operated their account for six
(6) months. This piece of
evidence was not controverted by
Defendants. I will accept this
piece of evidence and find that
Plaintiff did send 1st
Defendant its statements until
the 1st Defendant’s
account became dormant.
Alfred Bediako Cobbinah (P.W.2),
an Accountant engaged by
Defendants to reconcile the
accounts, tendered his Audit
Report (Exhibit “2”) in
evidence. His evidence under
cross-examination was as
follows:
“Q. So in the final analysis
what did you find vis-à-vis
Neberg Ghana Limited and
Merchant bank after
reconciliation?
A: I discovered that the
amount which strange enough the
bank didn’t prepare any
repayment schedule so as a
business man who had no time he
did not know how much he should
pay actually especially they
wrote the principal loan there,
pay 75,000,000 a month but they
forgot that it attracted
interest which they didn’t
mention how he should pay. But
in the bank statement we
discovered that they were
deducting 26,000,000 plus
75,000,000 sometimes three time
they did that in one month. So
I discovered that on the 500
Neberg collected which should
have attracted an interest of
155,000,000 working by 31% they
deducted at source from his
account GH¢51,613.35 from the
500 they gave him and the
interest accrued was 15,500. On
the 500 they deducted
GH¢1,613.35 so if you work by
31% which attracted 155 there
was a balance of 36,115.35 as
over payment of the loan. On
the 1,300,000,00 they at source
deducted 107 as loan repayment
and instead of 40,000 as loan
interest they rather deducted
163,229.5.
Q: Where does this appear in
your report?
A: the last page, in a nut
shell the overdraft interest the
first one was GH¢36,103.35 on
the 130 the principal interest
overpaid was GH¢67,510.04.
Neberg got 1,300,000,000 so the
130 he paid at source
¢163,229.95 leaving a balance of
33,229.95 so if you work out I
saw over deductions the bank
made from Neberg account total
was GH¢136,856.34.”
The position of the law is that
the Court is under no obligation
to accept the evidence of any
expert witness. Nonetheless, I
must state here that I did not
find the evidence of Mr. Alfred
Bediako Cobbinah (P.W.2) to be
credible. In the first place I
found the whole evidence led by
Mr. Cobbinah confusing to say
the least. Also, the evidence
placed before the Court was that
Mr. Cobbinah relied mainly on
the statements of account
tendered in evidence as Exhibit
“1” and other documents
furnished him by Defendants.
Under cross-examination, Mr.
Cobbinah conceded that he never
conferred with Plaintiff Bank to
seek any clarification when he
did his audit report (Exhibit
“2”).
In my opinion, Defendants did
not lead evidence to rebut the
evidence adduced on behalf of
the Plaintiff to tip the scale
in favour of the Defendants, and
I will so find.
As stated above, Defendants are
also contending that the
interest charged by the
Plaintiff is “unconscionable and
extortionate”. In Exhibits “A1”
(agreement covering the loan
facility of GH50,000) and “B1”
(agreement covering the
overdraft facility of GH80,000)
the interest rate stated was
29.5%. In Exhibit “E”, the
interest rate was stated as 25%.
Defendants, in my opinion,
appear to be relying on the
doctrine of “unconscionability”.
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.
In the old Gold Coast case of
Acquaye v. Halm [1917]
King-Farlow’s Gold Coast
Judgments (cited as [1917] KF
14) King-Farlow J said at
21-22:
“In equity as is well known an
agreement not proved to be
actually fraudulent may be
presumed to be so unconscionable
that it is tainted with fraud
and therefore voidable. This
presumption will be made for the
benefit of the weaker party,
where the parties to the
agreement dealt with each other
on very unequal terms”
“Unconscionable dealing”
therefore looks to the conduct
of the stronger party in
attempting to enforce or retain
the benefit of a 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, 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 they have the effect of
placing one party at a serious
disadvantage vis-à-vis
the other.”
And so, for example, a security
agreement between a bank and its
customer may be covered under
this principle. And after the
party making the claim have led
sufficient evidence to prove the
unconscionability, the party
seeking to defend the
transaction must prove that it
was fair, just and reasonable.
However, under English law, the
equitable jurisdiction to set
aside unconscionable
transactions does not cover
bank/customer relations.
In the Ghanaian case of
Attitsogbe v. CFC Construction
Co. (WA) Ltd & Read [2005-2006]
SCGLR, 858, the Supreme
Court held that under the
equitable doctrine of
unconscionable bargain, the
courts would set aside as
unconscionable, any dealing,
whether by contract or by gift,
where on account of special
disability of one of the
parties, that party had been
placed at a serious disadvantage
in relation to the other. The
categories of special
disability, which should not be
regarded as closed, would
include 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 was necessary.
All those circumstances could,
in the right context, justify
the courts’ intervention on the
basis of the equitable
principles embodied in the
doctrine of unconscionable
bargain. Where a party has
successfully made a case that he
or she had a special disability,
or the facts of a case lent
themselves to an application of
the doctrine, the onus would
devolve on the dominant party to
demonstrate that the transaction
had been fair, just and
reasonable. If the dominant
party failed to show that the
transaction had been fair, just
and reasonable, the court would
be entitled to set the
transaction aside. Acquaye v.
Halm [1917] KF14 (per
King-Farlow J at 21-22); blomley
v. Ryan {1956] CLR 362 (per
Fullagar J at 405); and
Commercial Bank of Australia
Ltd. V. Amadio [1983] 151 CLR
447 cited.
In the said case however, the
transaction between the 2nd
Plaintiff and Defendant therein
was flawed by the failure by the
said defendant to ensure that
the 2nd plaintiff had
adequate access to independent
advice. Given the 2nd
plaintiff‘s special disability,
namely age, infirmity and
dependency on the defendant in
relation to matters pertaining
to the business of the plaintiff
company, the court, as a court
of equity, would set aside the
transaction in the absence of
evidence on record that the 2nd
plaintiff had received
independent advice in relation
to it and that it was fair, just
and reasonable. Consequently
the Supreme Court upheld the
setting aside by the trial court
of the transfer of 5% of the 2nd
plaintiff’s shares in the
plaintiff company to the
defendant on the grounds of
equitable doctrine of
unconscionable bargain.
The instance case can clearly be
distinguished from the case
cited. The instant case relates
to the interest rate charged by
Plaintiff Bank as agreed on in a
contract between a bank and its
customer. The justification of
the payment therefore lies in
the subsisting contract.
Under the current market economy
followed by the government, the
imposition of interest rates has
been deregulated. The result is
that each bank now decides the
interest rate to be charged for
sums lent or to be paid by it,
for savings or for deposits.
Further, each bank exercises its
discretion in imposing simple or
compound interest, depending on
the nature of the transaction
with its customers. Authority
for the deregulation is
traceable from notices issued by
the central bank. i.e. the Bank
of Ghana.
It has been held in City
Investment Co. Ltd v. Print
Consult Limited
[1999-2000] 1 GLR 640 that
Cap 176 [1951 Rev.] deals only
with money lending transactions
by a person registered under it.
Even so in the
case of
Buckle v Bassil &
Anor [1967] GLR 237,
Ollennu J.A. in which it was
held that at the end of the day,
the creditors would collect more
than twelve times the amount
lent, and this worked out at a
very excessive and
unconscionable rate of interest
per annum thus making the
transaction harsh and
unconscionable, and one to which
the Loans Recovery Ordinance,
Cap. 175 and section 13 of the
Moneylenders Ordinance, Cap 176
applied, the decision was
reversed by the full bench of
the Court of Appeal in
Bassil v Buckle
[1970] C.C 6;
as per Archer J. the application
of the Loans Recovery
Ordinance had occasioned
miscarriage of justice.
In the instant case, the
Defendants did not counterclaim
for the setting aside of the
agreements/contracts. They only
raised the issue of
unconscionability in their
defence. More importantly, the
Defendants did not lead any
evidence to establish that the
interest charged was
unconscionable. I will find that
the interest charged by
Plaintiff was not
unconscionable.
In conclusion, I find that
Plaintiff has established its
case and consequently order the
repayment of the sum of
GH¢139,097.54 by the Defendants
together with interest at the
agreed rate calculated up to
30/06/08, and until the date of
final payment.
In the absence of any evidence
as to the cost of prosecuting
this case, I will award costs of
GH¢3,000.00 against the
Defendants.
(SGD)
BARBARA ACKAH-YENSU(J)
JUSTICE OF THE HIGH COURT
COUNSEL
ROBERT KINGSLEY YEBOAH
- PLAINTIFF
LADY EILENE ERSKINE
-
DEFENDANTS
IN THE HIGH
COURT OF JUSTICE (COMMERCIAL
DIVISION) HELD IN ACCRA ON 20TH
JANUARY 2011 BEFORE HER LADYSHIP
BARBARA ACKAH-YENSU (J)
SUIT
NO. BFS/364/08
MERCHANT BANK
GHANA LIMITED
Suing per its
Lawful Attorney SKIDCON
COMPANY
LIMITED
=== PLAINTIFF
VRS.
1.
NEBERG GHANA LIMITED
2.
YAW
OWUSU GYAPONG
3.
GEORGE
ADJEI
===
DEFENDANTS
=======================================================
JUDGMENT:
The Plaintiff, per its lawful
attorney, has sued the
Defendants herein for the
following:
1.
An
order for the repayment of the
sum of GH¢139,097.54 being the
defendant’s outstanding
liability on the facility
granted to the Defendants.
2.
Interest on the above sum as
agreed calculated up to 30/06/08
and to date of final payment.
3.
Cost
on a full indemnity basis
including cost of prosecuting
this action.
The Plaintiff’s case is that
pursuant to an application for a
credit facility by 1st
Defendant, Plaintiff granted 1st
Defendant two (2) facilities.
The first facility was an
overdraft of GH¢80,000 approved
on 2/3/2005. The second was a
loan facility of GH¢50,000.00
approved on 23/5/2005. The
Plaintiff’s further case is that
1st Defendant
defaulted in the repayment of
these facilities and after
consistently reneging on its
promises to repay the facility,
the 1st Defendant
wrote to the Plaintiff
apologising and requested that
the outstanding balances on the
two facilities be consolidated
and the amount treated as a loan
spread over a period so that the
1st Defendant could
repay within the said period.
Consequently on September, 2006,
the Plaintiff approved a credit
facility of GH¢136,000.00.
Defendants however defaulted
again in the repayment of the
said facility and as at 30/06/08
the outstanding indebtedness of
the Defendants stood at
GH¢139,097.54.
Per the pleadings, the
Defendants’ case is that when
the 1st Defendant
applied for an overdraft
facility of GH¢50,000.00 from
the Plaintiff sometime in 2005,
it took the Plaintiff a very
long time to notify Defendants
that the facility had been
granted. Hence by the time the
1st Defendant was
notified of the grant, the
facility had been “eaten up” by
the interest calculated by the
Plaintiff. It was also the
Defendants’ case that no bank
statements were issued to them
despite repeated demands for
same.
It was the Defendants’ further
case that sometime in 2006,
without consulting Defendants
the Plaintiff consolidated and
restructured Defendant’s loans.
Defendants averred that they had
been making payments to the
Plaintiff without the bank
providing them with statements
to enable them reconcile their
accounts. It is also the
Defendants’ case that “the
interest exacted on the facility
is unconscionable and
extortionate”.
It is trite learning that the
party who raises an issue
essential to the success of his
case assumes the burden of
proving it. The burden however
shifts to the defence only to
lead evidence to tip the scale
in his favour when on a
particular issue the Plaintiff
leads some evidence to prove his
case.
In the instant case the
Plaintiff has alleged that the 1st
Defendant wrote to apologize for
their default and in support of
this Mr. Richmond Aboagye (PW1),
the Branch Manager of the
Takoradi Branch of Plaintiff
Bank at the time 1st
Defendant was granted the
facilities in question, tendered
in evidence the letter signed by
the Managing Director, 2nd
Defendant (Exhibit “C”).
Plaintiff also alleged that it
was the Defendants who requested
the Bank to consolidate the
outstanding balance on the loan
accounts and to spread payment
over twenty-four (24) months.
P.W.1 tendered in evidence the
letter (Exhibit “D”) in support
of this assertion. P.W.1 also
tendered in evidence, the
facility letter covering the
restructuring (Exhibit “E”). In
Plaintiff’s approval letter,
Exhibit “E”, the total of the
facility was stated as
GH¢136,000.00. P.W.1’s evidence
was that after the
consolidation, the company still
defaulted in repayment and the
facility was restructured to
enable the 1st
Defendant Company pay the debt
but 1st Defendant
continued with the default
resulting in an outstanding
balance of GH¢211,000.00 as at
the date P.W.1 gave evidence.
P.W.1 denied the Defendant’s
assertion that before the 1st
Defendant Company could access
the facility which was approved
the principal had been “eaten
up” by the interest which had
accrued. His evidence was that
before 1st Defendant
Company accessed the facility
there was no interest
calculation because before
acceptance of the terms and
condition and utilization of the
funds, there was no contractual
agreement for Plaintiff to base
any deductions on.
With these pieces of evidence,
the burden of proof shifted to
the Defendants to lead evidence
to tip the scale in their
favour.
The 2nd Defendant
gave evidence and said as
follows:
Q: Who consolidated the
loan and the overdraft?
A: The Plaintiff
Q: Did they consult you?
A: No my Lord I was not
consulted.
Q: When did you receive
your first bank statement since
you took the loan?
A: The very day they
consolidated the loan and
overdraft and notified us. We
agreed that we owed them that
amount because on that same day
that they gave us the statement.
Q: What year was that?
A: 2007
Q: And when was the loan
given?
A: 2005
Q: When did he receive the
very first bank statement from
the bank?
A: 2007, I received the
first statement from the
Plaintiff.
Q: The Plaintiffs have
referred to a letter dated 3rd
June 2008 in which they say that
yourself and the 3rd
Defendant gave them the
authority to sell some
possessions of the company how
did that come about?
A: We received a letter
from Skipcom Company indicating
that the Plaintiff said we owe
them and that they should sell
some of our properties.
Initially we thought it was a
scam and followed up to Skipcom
office. When we went to Skipcom
office, in the course of the
discussions this issue came up
as to the fact that we should
write a letter or make an
undertaking. This undertaking
was drafted by an officer of
Skipcom and that we did not sign
this undertaking on our
freewill.
Under cross-examination this is
what the 2nd
Defendant said:
Q: Has Skipcom
taken any of your items?
A: No my Lord.
Q: When did you finish
paying your loan?
A: It was when I received
the first statement and I
realized that I have overpaid
the facility I received from the
Plaintiff besides that they
rescheduled the facility.
Q: So what you are saying
is that before the loan was
rescheduled you had finished
paying your debt with the bank?
A: That is so my Lord.
In the apology letter earlier
referred to, 2nd
Defendant wrote amongst others
as follows:
“The company is therefore
pleading to your institution to
kindly convert the outstanding
debt into loan and spread it on
flexible terms of payment for
the company to operate and pay
at the same time.
Hoping our apology will be
accepted and request for the
flexible payment will be
accepted in good faith.”
The said letter was dated 13th
March, 2006. Exhibit “D”, a
letter dated 7th
September 2007 with the heading
“Reconsideration of Repayment of
Loan”, was signed by 2nd
Defendant and a Director,
Stephen Owusu. In the 2nd
Defendant’s evidence in chief,
he made reference to a letter
dated 3rd June 2008
in which the 2nd and
3rd Defendants
authorized Plaintiff to sell
some of 1st
Defendant’s properties. 2nd
Defendant’s evidence was that an
officer of Skipcom drafted an
undertaking and pressurized him
into signing the undertaking
i.e. the said undertaking was
signed under duress.
I fail to appreciate the link
between the said undertaking and
the letter of apology in which 2nd
Defendant admitted that 1st
Defendant was in default, and
also that requesting for a
consolidation of the loan and
overdraft facilities. For a
start, the dates are very
different. The apology letter
was dated 13th March,
2006, “the request for
consolidation dated 7th
September, 2007; and the said
undertaking was said to have
been drafted sometime in 2008.
It therefore cannot be a fact
that the 2nd
Defendant was pressurized into
writing the letter of apology
and Defendants have not proved
that it was Plaintiff itself
that did the consolidation
without Defendants’ knowledge or
consent. Exhibits “C” and “D”
prove that Defendants were aware
that they had defaulted as far
back as 13th March
2006, when they wrote the letter
of apology.
It was also P.W.1’s evidence
under cross-examination that
Plaintiff stopped sending
statements to 1st
Defendant when their account
became dormant. That means that
1st Defendant had not
operated their account for six
(6) months. This piece of
evidence was not controverted by
Defendants. I will accept this
piece of evidence and find that
Plaintiff did send 1st
Defendant its statements until
the 1st Defendant’s
account became dormant.
Alfred Bediako Cobbinah (P.W.2),
an Accountant engaged by
Defendants to reconcile the
accounts, tendered his Audit
Report (Exhibit “2”) in
evidence. His evidence under
cross-examination was as
follows:
“Q. So in the final analysis
what did you find vis-à-vis
Neberg Ghana Limited and
Merchant bank after
reconciliation?
A: I discovered that the
amount which strange enough the
bank didn’t prepare any
repayment schedule so as a
business man who had no time he
did not know how much he should
pay actually especially they
wrote the principal loan there,
pay 75,000,000 a month but they
forgot that it attracted
interest which they didn’t
mention how he should pay. But
in the bank statement we
discovered that they were
deducting 26,000,000 plus
75,000,000 sometimes three time
they did that in one month. So
I discovered that on the 500
Neberg collected which should
have attracted an interest of
155,000,000 working by 31% they
deducted at source from his
account GH¢51,613.35 from the
500 they gave him and the
interest accrued was 15,500. On
the 500 they deducted
GH¢1,613.35 so if you work by
31% which attracted 155 there
was a balance of 36,115.35 as
over payment of the loan. On
the 1,300,000,00 they at source
deducted 107 as loan repayment
and instead of 40,000 as loan
interest they rather deducted
163,229.5.
Q: Where does this appear in
your report?
A: the last page, in a nut
shell the overdraft interest the
first one was GH¢36,103.35 on
the 130 the principal interest
overpaid was GH¢67,510.04.
Neberg got 1,300,000,000 so the
130 he paid at source
¢163,229.95 leaving a balance of
33,229.95 so if you work out I
saw over deductions the bank
made from Neberg account total
was GH¢136,856.34.”
The position of the law is that
the Court is under no obligation
to accept the evidence of any
expert witness. Nonetheless, I
must state here that I did not
find the evidence of Mr. Alfred
Bediako Cobbinah (P.W.2) to be
credible. In the first place I
found the whole evidence led by
Mr. Cobbinah confusing to say
the least. Also, the evidence
placed before the Court was that
Mr. Cobbinah relied mainly on
the statements of account
tendered in evidence as Exhibit
“1” and other documents
furnished him by Defendants.
Under cross-examination, Mr.
Cobbinah conceded that he never
conferred with Plaintiff Bank to
seek any clarification when he
did his audit report (Exhibit
“2”).
In my opinion, Defendants did
not lead evidence to rebut the
evidence adduced on behalf of
the Plaintiff to tip the scale
in favour of the Defendants, and
I will so find.
As stated above, Defendants are
also contending that the
interest charged by the
Plaintiff is “unconscionable and
extortionate”. In Exhibits “A1”
(agreement covering the loan
facility of GH50,000) and “B1”
(agreement covering the
overdraft facility of GH80,000)
the interest rate stated was
29.5%. In Exhibit “E”, the
interest rate was stated as 25%.
Defendants, in my opinion,
appear to be relying on the
doctrine of “unconscionability”.
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.
In the old Gold Coast case of
Acquaye v. Halm [1917]
King-Farlow’s Gold Coast
Judgments (cited as [1917] KF
14) King-Farlow J said at
21-22:
“In equity as is well known an
agreement not proved to be
actually fraudulent may be
presumed to be so unconscionable
that it is tainted with fraud
and therefore voidable. This
presumption will be made for the
benefit of the weaker party,
where the parties to the
agreement dealt with each other
on very unequal terms”
“Unconscionable dealing”
therefore looks to the conduct
of the stronger party in
attempting to enforce or retain
the benefit of a 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, 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 they have the effect of
placing one party at a serious
disadvantage vis-à-vis
the other.”
And so, for example, a security
agreement between a bank and its
customer may be covered under
this principle. And after the
party making the claim have led
sufficient evidence to prove the
unconscionability, the party
seeking to defend the
transaction must prove that it
was fair, just and reasonable.
However, under English law, the
equitable jurisdiction to set
aside unconscionable
transactions does not cover
bank/customer relations.
In the Ghanaian case of
Attitsogbe v. CFC Construction
Co. (WA) Ltd & Read [2005-2006]
SCGLR, 858, the Supreme
Court held that under the
equitable doctrine of
unconscionable bargain, the
courts would set aside as
unconscionable, any dealing,
whether by contract or by gift,
where on account of special
disability of one of the
parties, that party had been
placed at a serious disadvantage
in relation to the other. The
categories of special
disability, which should not be
regarded as closed, would
include 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 was necessary.
All those circumstances could,
in the right context, justify
the courts’ intervention on the
basis of the equitable
principles embodied in the
doctrine of unconscionable
bargain. Where a party has
successfully made a case that he
or she had a special disability,
or the facts of a case lent
themselves to an application of
the doctrine, the onus would
devolve on the dominant party to
demonstrate that the transaction
had been fair, just and
reasonable. If the dominant
party failed to show that the
transaction had been fair, just
and reasonable, the court would
be entitled to set the
transaction aside. Acquaye v.
Halm [1917] KF14 (per
King-Farlow J at 21-22); blomley
v. Ryan {1956] CLR 362 (per
Fullagar J at 405); and
Commercial Bank of Australia
Ltd. V. Amadio [1983] 151 CLR
447 cited.
In the said case however, the
transaction between the 2nd
Plaintiff and Defendant therein
was flawed by the failure by the
said defendant to ensure that
the 2nd plaintiff had
adequate access to independent
advice. Given the 2nd
plaintiff‘s special disability,
namely age, infirmity and
dependency on the defendant in
relation to matters pertaining
to the business of the plaintiff
company, the court, as a court
of equity, would set aside the
transaction in the absence of
evidence on record that the 2nd
plaintiff had received
independent advice in relation
to it and that it was fair, just
and reasonable. Consequently
the Supreme Court upheld the
setting aside by the trial court
of the transfer of 5% of the 2nd
plaintiff’s shares in the
plaintiff company to the
defendant on the grounds of
equitable doctrine of
unconscionable bargain.
The instance case can clearly be
distinguished from the case
cited. The instant case relates
to the interest rate charged by
Plaintiff Bank as agreed on in a
contract between a bank and its
customer. The justification of
the payment therefore lies in
the subsisting contract.
Under the current market economy
followed by the government, the
imposition of interest rates has
been deregulated. The result is
that each bank now decides the
interest rate to be charged for
sums lent or to be paid by it,
for savings or for deposits.
Further, each bank exercises its
discretion in imposing simple or
compound interest, depending on
the nature of the transaction
with its customers. Authority
for the deregulation is
traceable from notices issued by
the central bank. i.e. the Bank
of Ghana.
It has been held in City
Investment Co. Ltd v. Print
Consult Limited
[1999-2000] 1 GLR 640 that
Cap 176 [1951 Rev.] deals only
with money lending transactions
by a person registered under it.
Even so in the
case of
Buckle v Bassil &
Anor [1967] GLR 237,
Ollennu J.A. in which it was
held that at the end of the day,
the creditors would collect more
than twelve times the amount
lent, and this worked out at a
very excessive and
unconscionable rate of interest
per annum thus making the
transaction harsh and
unconscionable, and one to which
the Loans Recovery Ordinance,
Cap. 175 and section 13 of the
Moneylenders Ordinance, Cap 176
applied, the decision was
reversed by the full bench of
the Court of Appeal in
Bassil v Buckle
[1970] C.C 6;
as per Archer J. the application
of the Loans Recovery
Ordinance had occasioned
miscarriage of justice.
In the instant case, the
Defendants did not counterclaim
for the setting aside of the
agreements/contracts. They only
raised the issue of
unconscionability in their
defence. More importantly, the
Defendants did not lead any
evidence to establish that the
interest charged was
unconscionable. I will find that
the interest charged by
Plaintiff was not
unconscionable.
In conclusion, I find that
Plaintiff has established its
case and consequently order the
repayment of the sum of
GH¢139,097.54 by the Defendants
together with interest at the
agreed rate calculated up to
30/06/08, and until the date of
final payment.
In the absence of any evidence
as to the cost of prosecuting
this case, I will award costs of
GH¢3,000.00 against the
Defendants.
(SGD)
BARBARA ACKAH-YENSU(J)
JUSTICE OF THE HIGH COURT
COUNSEL
ROBERT KINGSLEY YEBOAH
- PLAINTIFF
LADY EILENE ERSKINE
-
DEFENDANTS
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