HIGH COURT, ACCRA
DATE: 15TH FEBRUARY, 1962
BEFORE: OLLENNU, J.
CASE REFERRED TO
Kasumu v. Baba Egbe [1956] A.C. 539; [1956] 3 W.L.R. 575; [1956] 3 All E.R. 266, P.C.
NATURE OF PROCEEDINGS
CLAIM for accounts and for redemption of property mortgaged as security for loan. The facts as set out in the headnote are taken from the judgment of Ollennu, J.
COUNSEL
A. W. Acquaah for the plaintiff.
E. Akuffo-Addo (with him P. F. O. Anteson) for the first defendant.
No appearance for or by the second defendant.
JUDGMENT OF OLLENNU J.
[His lordship stated the facts as set out in the headnote and continued:] The evidence of the plaintiff and his witnesses that on each of the six occasions of payment he paid £G250, part of which went towards liquidation of the loan, taken together with the evidence that the last payment was made in or about 1959, if true, would mean that up to 1960 the plaintiff had paid £G750 or more towards the capital of £G1,000. This contention is flatly contradicted by the plaintiff himself in a letter, exhibit 1, which he wrote to the first defendant on the 23rd February, 1961, wherein he admitted that £G1,000 was due from him at that date. I reject the evidence given by the plaintiff and his witnesses. I am satisfied that the amount the plaintiff paid on each of the six occasions is £G125 and not £G250.
Now the plaintiff gave evidence that the first defendant defaulted to give receipts for any of the payments he made to him; the first defendant admitted that he defaulted to give receipts but said that that happened only in respect of four of the payments, and that he gave receipts for the fifth and sixth payments.
[p.80] of [1962] 1 GLR 78
It was submitted on behalf of the plaintiff that the failure of the first defendant to give receipts contravened section 19 (1) of the Moneylenders Ordinance,1(1) and rendered the whole transaction unenforceable by virtue of section 19 (4) of the said Ordinance. In support of that submission counsel cited the Nigerian case of Kasumu v. Baba Egbe.2(2) In reply to that submission counsel for the first defendant referred the court to the plaintiff’s claim which is for accounts and redemption of the mortgage upon payment of what would be found due, and submitted that the plaintiff is bound by his said claim and cannot now be heard to say that the loan transaction is unenforceable. It was further submitted that the first defendant has not come to court to enforce the loan transaction, he has been brought to court, and the plaintiff who brought him should stand or fall by his claim. It was further submitted that having regard to the wording of the said section 19 (4) of the Moneylenders Ordinance,
it is only when a lender seeks to enforce a claim that the penalty laid down in the said subsection can be visited upon him.
The case of Kasumu v. Baba Egbe was based upon section 19 of the Nigeria Moneylenders Ordinance which is in identical terms with section 19 of the Ghana Moneylenders Ordinance. The claim in that suit was, as in this present suit, for accounts and redemption. The default made in that case was failure by the moneylenders to keep a book as required by section 19 (2) in which to enter up the date the loan was made, that amount of the principal advanced, the rate of interest, all payment made in respect of loan or interest, and the dates on which such payments were made.
Section 19 of the Moneylenders Ordinance provides as follows:
“19. (1) Every moneylender shall give a receipt for every payment made to him on account of a loan or of interest thereon. Every such receipt shall be given immediately the payment is made.
(2) Every moneylender shall keep a book (which shall be securely bound and paged so that leaves cannot be removed or inserted without apparent damage) in which he shall enter in connection with every loan made by him-
(a) the date on which the loan was made;
(b) the amount of the principal;
(c) the rate of interest;
(d) all sums received in respect of the loan or the interest thereon, with the dates of payment thereof and shall produce such book when required to do so by any Court.
(3) The entries in the said book shall be made forthwith on the making of the loan or the receipt of sums paid in respect thereof as the case may be.
(4) Any moneylenders who fails to comply with any of the requirements of this section shall not be entitled to enforce any claim in respect of any transaction in relation to which the default shall have been made. He shall also be guilty of an offence under this Ordinance and shall be liable to a fine not exceeding ten pounds or in the case of a continuing offence to a fine not exceeding five pounds for each day or part of a day during which such offence continues.”
In the course of the judgment of the Privy Council in Kasumu v. Baba Egbe, their Lordships said— “When the governing statute enacts that no loan which fails to satisfy any of these requirements is to be enforceable it must be taken to mean what it says, that no court of law is to recognize the lender as having a right at law to get his money back. That is part of the penalty which the statute imposes”.3(3)
[p.81] of [1962] 1 GLR 78
In my opinion that case is in some respects distinguishable from the present one. In my opinion the emphasis as to unenforceability in section 19 (4) is on the words “any claim in respect of any transaction in relation to which the default shall have been made”. The requirements laid down by the said section 19 are with respect of two things: (1) receipts for payment made (a) on account of loan or (b) on account of interest, and (2) a book in which to make entries of the whole of the loan transaction. The subsection does not say that failure to comply with any of the requirements rendered the loan transaction void. If the legislature had intended default with any of the said requirements to render the whole of the loan transaction as such, unenforceable, it would have said so.
In my opinion the proper construction of section 19 (4) is that if default is made with respect to one particular transaction a claim in respect of that particular transaction, and that alone, became unenforceable, and not that the whole of the loan transaction would be unenforceable. In the case of Kasumu v. Baba Egbe, the default made, as already pointed out was in respect to section 19 (2), namely, keeping a book for recording the loan transaction itself and everything connected with it, the interest charged, payments made on account of capital, payments made on account of interest, and the date of each such payment, that is the whole of the loan transaction.
Therefore a default to keep such a book rendered the whole loan transaction unenforceable. Hence it was held that upon redemption the lender was not entitled to credit for any unpaid balance of the loan.
But in this case the default is in respect of section 19 (1), default to give receipt for interest paid to the lender. Therefore the unenforceability can only affect the particular transaction in respect of which those moneys were paid to the lender, and not the whole of the loan transaction.
That is to say, the lender is not entitled to enforce his right to keep the money he received and appropriate it to the special account to which it was paid. Therefore upon accounts being taken in respect of the loan, he, the first defendant would not be entitled to claim the payments made as interest on the loan; in other words he cannot enforce his claim to interest, the transaction in respect of which he defaulted. And since the first defendant cannot enforce interest, it follows that the amounts he received can only be regarded as made with respect to the transaction which alone remains enforceable, namely the loan transaction.
A mortgagor is always entitled to an order for redemption conditionally or unconditionally. Where the loan transaction has become unenforceable as in the case of Kasumu v. Baba Egbe, the order for redemption will be unconditional, otherwise it will be conditional upon payment of any sum, which upon the accounts being taken, would be found legitimately due. Therefore the plaintiff is entitled to an order for redemption upon payment to the first defendant of any balance due on the loan of £G1,000 after he has been credited with the amount of £G750, the total sum he paid on the six occasions.
There will be judgment for the plaintiff against the first defendant for an order that he should redeem the mortgage upon payment to the first defendant of the sum of £G250 balance due on the loan.
DECISION
Judgment for the plaintiff.
