COWRIES FINANCE LTD vs. PAKO BAY SEAFOOD LTD [1999-2000] 1 GLR 514

NATURE OF PROCEEDINGS

APPLICATION by the plaintiff-applicant to the High Court for summary judgment under Order 14 of the High Court (Civil Procedure) Rules, 1954 (LN 140A) as amended by the High Court (Civil Procedure) (Amendment) (No.2) Rules, 1977 (LI 1129) against the defendant-respondent for the sum of 448,505,853, being the principal and interest of a loan facility the plaintiff had granted the defendant. The facts are sufficiently stated in the judgment of the court.

COUNSEL

Peter Amable for the plaintiff-applicant.

Charles Amenyaglo for the defendant-respondent.

JUDGMENT OF AKOTO-BAMFO J.

This is an application by the plaintiff-applicant (hereinafter referred to as the plaintiff) for summary judgment under Order 14 of the High Court (Civil Procedure) Rules, 1954 (LN 140A) as amended against the defendant-respondent (hereinafter referred to as the defendant) for the sum of ¢48,506,855.

To appreciate the issues raised, I find it necessary to relate briefly the history of this case. On 19 May 1998 the plaintiff took out a writ of summons for an order for the payment of ¢46,506,855,[sic](3) among other reliefs. When service of the writ and statement of claim was effected on the defendant, a conditional appearance was entered on its behalf on 2 June 1998. On 18 June 1998, the instant application was filed. The defendant filed a defence and an affidavit in opposition.

In urging the court to grant the application, learned counsel for the plaintiff submitted that the defendant approached the plaintiff for a loan facility of ¢15 million to enable it finance the export of lobster tails. According to the terms of the contract, the loan was to be repaid within 30 days at an agreed interest rate of eight per cent and that even though several demands had been made for the payment

[p.518] of [1999-2000] 1 GLR 514 of the principal and interest, the defendant had failed to pay. According to counsel, when the loan remained unpaid and the Bank of Ghana had to revise its interest rates, the defendant was notified of the revision and that even though the defendant issued post-dated cheques and gave assurances that it would settle its debts, the cheques were dishonoured. According to learned counsel, the defendant had no defence to the action.

The defendant resisted the application. On its behalf, learned counsel argued that the application was misconceived since it failed to comply with the requirements of Order 14, r 2(1) of LN 140A. According to learned counsel, there was no statement of account showing the sum owed, neither was there an affidavit verifying the facts. He further submitted that even though the plaintiff company was alleged to have changed its name, it failed to comply with sections 15(3) and 22 of the Companies Code, 1963 (Act 179) in that the approval of the registrar was not obtained and that well after the purported change, the name Akaba & Associates appeared on documents made by the company. He further submitted that the transaction was illegal since it offended against the provision of the Moneylenders Ordinance, Cap 176 (1951 Rev), and therefore urged the court to reopen the transaction. He additionally contended that since the interest rate of eight per cent was agreed upon by both parties, the plaintiff could not revise the rates without the consent of the defendant.

The procedure under Order 14, r 13 of the LN 140A as amended by the High Court (Civil Procedure) (Amendment) (No 2) Rules, 1977 (LI 1129) enables a plaintiff to obtain summary judgment in an action begun by a writ which does not include a claim for libel, slander, malicious prosecution, false imprisonment, seduction, breach of promise to marry and a claim based on an allegation of fraud. The application can only be made on the ground that the defendant has no defence to the claim or part thereof, and would therefore be inexpedient to proceed to a full trial. To successfully bring an application under Order 14 of LN 140A these conditions must be met:

(1) The defendant must have entered appearance.

(2) A statement of claim must have been served on the defendant, the affidavit must verify the facts and it must contain a statement of the deponent’s belief that there is

[p.519] of [1999-2000] 1 GLR 514 no defence to the claim or part thereof in respect of which the application is made.

In the matter under consideration, even though the defendant initially entered a conditional appearance and thereby reserved to itself the right to object to the jurisdiction, the writ and service thereof, it evidently abandoned that stance for it failed to bring the application within the statutory period. That the conditional appearance, therefore, metamorphosed into an unconditional one, is beyond question.

Learned counsel for the defendant argued that there was no statement of account showing how much was owed and therefore the statement of claim did not satisfy the requirement. It is a condition precedent that in an application under Order 14 of LN 140A the plaintiff must serve a statement of claim on the defendant. It is the case for counsel that since a statement of account was not attached, the statement of claim was incomplete.

It is obvious that a statement of account was not annexed to the statement of claim but since in the statement of claim is a narration of the events which resulted in the figure stated on both the writ and the statement of claim, the latter, in my view, satisfied the requirement. It is, in my view, complete and good and would not require any correction or supplement by any affidavit. The objection is without any basis.

Learned counsel further submitted that the affidavit fell short in that it did not verify the facts. The application was undoubtedly supported by an affidavit which traced the history of events, in detail, culminating in the present application and there was a deposition of the fact that the defendant had no defence. The issue is whether that affidavit satisfies the requirement.

An application under Order 14 of LN 140A must be supported by an affidavit “verifying the facts on which the relevant claim or part of a claim is based”: see Order 14, r 2(1) of LI 1129. To “verify” in ordinary parlance is to check or confirm something or make sure that something is accurate and true. In the statement of claim accompanying the writ, the plaintiff gave out details of the transaction between them, and in the affidavit in support the plaintiff under oath again did set out in a similar vein, in detail, the facts on which the claim is based. If in the statement of claim, the facts on which the claim was based were set out and same repeated under

[p.520] of [1999-2000] 1 GLR 514 oath and thereby confirming the existence of the facts stated in the statement of claim, it cannot be said that there had been no verification of the facts on which the claim is based. An affidavit being a sworn statement serves as a confirmation of the facts. I am of the view that the rule does not require the deposition of two affidavits. I therefore reject the submission of counsel on the issue.

Learned counsel further contended that the approval of the Registrar General was not sought before the change of name from Akaba & Associates to Cowries Finance Ltd and that even after the said change, the plaintiff continued to transact business in the name of Akaba & Associates. In answer, the plaintiff exhibited CA7, a copy of the special resolution made by the company. On the said document appears the following: “filed 31 March 1995. (Sgd) G Lomotey for Registrar of Companies.” Exhibit CA7 was described as a certified copy and it was duly signed.

Section 15(3) of Act 179 provides that: “A company may, by special resolution and with the approval of the Registrar signified in writing change its name.” Exhibit CA7 was signed by G Lomotey on behalf of the Registrar of Companies. If the registrar did not give his approval, certainly his signature would not have appeared on the document. There is therefore no merit in the objection and I accordingly dismiss same.

It was further contended that the company continued to do business in its original name. For support, learned counsel cited annexure CA4, a letter written by the chief executive on the letter head of Akaba & Associates Ltd and dated 27 September 1995. This letter was obviously written after 31 March 1995 when the special resolution had been passed. The operations of companies are regulated by the Registrar General in accordance with the provisions of Act 179. Where therefore a party has complied with the statutory provisions, does the mere fact that it fails to effect changes on its letter head negate the fact that there has been a compliance? sI think not.

There is evidence that the company subsequently effected the change in its dealings with the respondent. Indeed, as per CA5, the receipt issued to the defendant upon the issuance of the post-dated cheques, the name Cowries Finance Co Ltd appeared. CA5, the receipt, was issued to the defendant. It is dated 5 June 1996. Significantly it was to signify that the plaintiff had received the

[p.521] of [1999-2000] 1 GLR 514 sum of ¢10 million from the defendant. It is pertinent to note that the cheque for ¢10 million was issued in the name of Akaba & Associates. If the defendant draws a cheque in favour of Akaba & Associates, and receives a document stating that Cowries Finance Ltd is acknowledging receipt, why did the defendant not raise an objection that the wrong party had received the amount on the face of the cheque? It is my considered view that the defendant was made aware of the change well before the issuance of the writ and he cannot now be heard to complain.

Learned counsel further argued that since the interest rate was fixed by both parties, it was wrong on the part of the plaintiff to revise the rates. Undoubtedly, the initial rate of interest was eight per cent. The facility was, however, to be retired within 30 days. The loan transaction took place in 1994. As at 20 October 1997, as evidenced by a letter written by the defendant, it had still not fully repaid the loan and was asking for extension of time to November 1997. Since interest rates are fixed with due regard to many economic factors, would it be just to hold that the initial rates be maintained, changes in the economic factors notwithstanding? I think not. When the plaintiff found it necessary to revise the rates, it wrote to the defendant as per CA4; if the defendant had any objection it was incumbent upon it to have so stated. It did nothing then and it is too late for it to object, particularly in circumstances where it had failed to perform. If, indeed, it had paid back the loan within the 30-day period, the revision of the rates would not have affected it.

As to whether the transaction sins against the provisions of the Cap 176, in section 2 of Cap 176 “moneylender” has been defined to include any person whose business is that of money lending, among others. It is, however, provided for in section 2(b) of Cap 176 that the definition shall not include any body corporate, incorporated or empowered by special Ordinance to lend money in accordance with such Ordinance. Cowries Finance Ltd is a financial institution and its activities are undoubtedly regulated by the Financial Institutions (Non-Banking) Law, 1992 (PNDCL 328). In the said Law, the activities of the plaintiff are regulated by the Bank of Ghana, which is enjoined to make regulations for the effective organisation of the institutions hereunder.

It is the plaintiff’s case that it had to revise its interest rates in accordance with the changes made by the Bank of Ghana. Since the

[p.522] of [1999-2000] 1 GLR 514

Bank of Ghana is the regulatory body, in the absence of any evidence to the contrary, the plaintiff is bound by the changes so made. At any rate, had the defendant performed under the contract, the revision would not have affected its operations.

The defendant approached the plaintiff for a loan facility, the conditions for the loan were shown to its representatives, who obviously read, fully understood same and signed. When it defaulted and it was therefore owing and there had to be a revision of the rates, it was duly notified. Subsequently, it issued post-dated cheques which were dishonoured. There is no evidence that the defendant has since made any attempt at discharging its obligations to the plaintiff. Since it entered into the contract with its “eyes opened” as it were, and particularly in circumstances where it has failed to perform, it lies ill in its mouth to complain. If financial institutions are to stay in business, there is the need to ensure that persons who apply for facilities from them do honour their obligations thereunder.

On hearing both learned counsel and on reading the affidavits and the annexures therefore, I grant the application and accordingly enter final judgment for the plaintiff against the defendant for the sum of ¢48,506,852[sic](4) at the current rate of interest from March 1998 to date of final payment.

DECISION

Application granted.

SA

Endnotes

1 (Popup – Footnote) [sic] same in original. 2 (Popup – Footnote) [sic] same in original. 3 (Popup – Footnote) [sic] same in original. 4 (Popup – Footnote) [sic] same in original.