CITY INVESTMENT CO LTD vs. PRINT CONSULT LTD AND ANOTHER [1999-2000] 1 GLR 640

NATURE OF PROCEEDINGS

APPLICATION for summary judgment under Order 14, rr 1 and 2 of the High Court (Civil Procedure) Rules, 1954 LN 140A) as amended by the High Court (Civil Procedure) (Amendment) Rules, 1977 (LI 1129) by the plaintiff, a non-banking financial institution, against the defendant who had defaulted in paying back a loan it had obtained from the plaintiff. The facts are fully stated in the ruling of the court.

COUNSEL

Awadzi for the plaintiff applicant.

Nana Kwesi Agyeman Prempeh for the defendant respondents.

JUDGMENT OF DORDZIE J.

By an agreement dated 27 March 1997 the first defendant company took a loan facility of ¢20 million from the plaintiff-company, a non-banking financial institution. The loan was to be repaid within 30 days, and it was to attract interest at the rate of eight percent per 30 days’ period. These terms were stipulated in the agreement which is exhibited with this application as exhibit B. The second defendant guaranteed the loan.

As at 18 June 1998 the defendants had not fully paid the loan. There was an outstanding balance of ¢14,757,624.87. The plaintiff therefore brought this action for payment of this amount plus the accrued interest at eight percent from 18 June 1998 to the date of final payment.

In the present application, the plaintiff is asking for summary judgment under Order 14, rr 1 and 2 of the High Court (Civil

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Procedure) Rules, 1954 (LN 140A) as amended by the High Court (Civil Procedure) (Amendment) (No 2) Rules, 1977 (LI 1129). The defendant filed a statement of defence and opposed the summons for summary judgment on the following grounds:

“(a) That they have filed a defence that raises triable issues (b) By the said defence their position is that the interest charged by the plaintiff on the loan is too exorbitant and excessive and it makes the transaction harsh and unconscionable. The court should therefore reopen the transaction under the Loans Recovery Ordinance, Cap 175 (1951 Rev).

(c) The interest the plaintiff ought to have charged is 42 percent per annum and going by that rate, they do not owe the plaintiff.”

In arguing the summons, counsel for the plaintiff submitted that Cap 175 is not applicable to the transaction in question. The applicable law is the Financial Institutions (Non-Banking) Law, 1993 (PNDCL 328), and if section 3 of Cap 175 and section 2 of the Moneylenders Ordinance, Cap 176 (1951 Rev) are read together with PNDCL 328, it is clear that the operation of Cap 175 is ousted in the transaction in question.

The plaintiff company is a non-banking financial institution established under PNDCL 328. Under section 4 of this Law the Bank of Ghana issues licences to such institutions to operate and generally supervises their operations. The Bank of Ghana therefore has issued operating guidelines for such institutions as the plaintiff company. A copy of the operating guidelines applicable is exhibited to the application as exhibit E. The directive given by the Bank of Ghana in respect of interest rates non-banking financial institutions in exhibit E paragraph (4) is as follows: “Licensed Finance Houses shall determine their own rates of interest on loans. They shall also determine charges of any services rendered. These should, however, be made known to the Bank of Ghana”

The defendants are urging this court to rely on section 3(1) of Cap 175 to reopen the transaction between the parties. Section 3 (1) of Cap 175 says:

“3. (1) Where proceedings are taken in any Court for the

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recovery of any money lent after the commencement of this Ordinance, or the enforcement of any agreement or security . . . in respect of money lent either before or after the commencement of this Ordinance, and there is evidence which satisfies the Court that the interest charged in respect of the sum actually lent is excessive, or that the amount charged for expenses, enquiries, fines, bonus, premium, renewals or any other charges, are excessive, and that, in either case the transaction is harsh and unconscionable, or is otherwise such that a Court of equity would give relief, the Court may re-open the transaction and take an account between the lender and the person sued.”

My views on this section of Cap 175 read together with section 2 of Cap 176 differ from counsel for plaintiff-applicant’s submissions. Section 2 of Cap 176 is the interpretation section of that Ordinance. Under section 2 of Cap 176 a “moneylender” is defined and it says: “‘Moneylender’ means and includes every person whose business is that of moneylending or who carries on or advertises or announces himself or holds himself out in any way as carrying on that business, whether or not he also possesses or owns property or money derived from sources other than the lending of money and whether or not he carries on the business as a principal or as an agent; but shall not include (a) any society registered under the co-operative societies ordinance or (b) any body corporate, incorporated or empowered by special ordinance to lend money in accordance with such ordinance.”

By this interpretation, the plaintiff which is a body corporate, is not a moneylender. Section 3(1) of Cap 175 empowers the court in proceedings before it for the recovery of any money lent to reopen the transaction where there is evidence which satisfies the court that the interest charged in respect of the sum actually lent is excessive, and that the transaction is harsh and unconscionable or is as such that a court of equity would give relief. It is my view that with the phrase “the recovery of any money lent” section 3(1) of Cap 175 covers transactions other than transactions involving a moneylender as [p.644] of [1999-2000] 1 GLR 640

defined under section 2 of Cap 176. The plaintiff is not a “moneylender” as defined by section 2 of Cap 176. However, the issues in this case are issues in respect of money lent. Section 3 (1) of Cap 175 is applicable to proceedings before a court involving recovery of “any money lent.” In my view, therefore, section 3(1) of Cap 175 is applicable to the case before me. However, what this court needs to look at is whether there is satisfactory evidence that the interest charged by the plaintiff is excessive and that the transaction is harsh and unconscionable.

PNDCL 328 and the operating guidelines, exhibit E, show that the eight percent interest at 30-day periods charged by the plaintiff is not arbitrary. It is a rate approved by the Bank of Ghana. Apart from this, it was the defendant’s choice to borrow from a non-banking financial institution which was charging eight percent per month instead of a commercial bank which was charging 42 per cent per annum at that time. There is no evidence before me that the defendant was fraudulently pushed into the transaction or that entered into it by mistake; rather there is a written agreement, exhibit B, clearly setting out the terms of the transaction. The defendant signed and indicated that the terms are acceptable to it.

Upon breach of the terms of the agreement by the defendant, it is a show of bad faith for the defendant to ask this court to reopen the transaction. The interest rate is not excessive since it is an approved rate by the central bank for a non-banking financial institution. The transaction cannot be described as harsh and unconscionable and no court of equity will give a relief under the circumstances.

I therefore hold that the defendant cannot take cover under section 3 (1) of Cap 175. The defendant has not denied that it borrowed money from the plaintiff and the amount being claimed in this suit is the outstanding balance of what it owes. The defence it has put up, I find to be a sham and raises no triable issues. The plaintiff, I find, is entitled to summary judgment under Order 14, r 18 and 2 of LN 140A as amended by LI 1129. I accordingly enter judgment for the plaintiff in the sum of ¢14,757,624.87. Costs of ¢1 million to the plaintiff.

DECISION

Application granted.

SA