KUSI v. KUSI [1968] GLR 1120

DIVISION: HIGH COURT, KUMASI

DATE: 20 DECEMBER 1968

BEFORE: ANNAN J.

NATURE OF PROCEEDINGS

ACTION for the recovery of the unsatisfied balance of a loan and for damages for fraud and deceit.

COUNSEL

L. B. Akainyah for the plaintiff.

E. K. Wiredu for A. Sakyi for the defendant.

[p.1121] of [1968] GLR 1120

JUDGMENT OF ANNAN J.

The plaintiff ‘s claim against the defendant is for the sum of £G600 being as to £G305 the unsatisfied balance of a loan and as to £G295 damages for fraud or deceit or both.

The plaintiff is a licensed moneylender and the defendant a goldsmith, both of the town of Onwe near Ejisu. The plaintiff lived at Onwe and the defendant lived and worked in Kumasi. The plaintiff’s statement of claim alleges that in or about 1957 he lent the defendant the sum of £G382 10s. with interest of £G67 10s. and by the terms of the mortgage the defendant was to repay the principal and interest on or before 31 January 1958 and the defendant offered several farms and an uncompleted house at Onwe as security. The defendant defaulted in the repayment of the loan and the plaintiff exercised his right of sale under the mortgage. The defendant’s family then sued the plaintiff to set aside the sale on the ground that the properties mortgaged by the defendant were family property. In 1965 the defendant’s family had the sale of the house set aside and the plaintiff was ordered to pay damages of £G25 for trespass with costs of 60 guineas. The plaintiff then instituted this action. It is the contention of the plaintiff that the mortgage of the house to him by the defendant was fraudulent in that he knew that the house was family property and yet mortgaged it without the consent or knowledge of the family and further that he swore to an affidavit in which he falsely stated that the house was his own self-acquired property. For his part, the defendant in his statement of defence, admits the loan and the mortgage but puts the principal at £G300 and interest at £G150 and says that the figures stated in the mortgage deed were false. He admits that the properties secured by the mortgage were family properties but contends that the plaintiff had knowledge of the family character of these properties, and made him use them for the purposes of the mortgage, with the defendant’s sister as surety. The defendant admits that his family sued the plaintiff for the recovery of the house and the setting aside of the sale, he denies however that he acted fraudulently and does not admit the particulars of fraud pleaded by the plaintiff and counterclaimed for a declaration that the loan transaction with the mortgage is null and void and unenforceable under the Moneylenders Ordinance, Cap. 176 (1951 Rev.), and in the alternative for an order under the Loans Recovery Ordinance, Cap. 175 (1951 Rev.), that the transaction is harsh and unconscionable and for relief under that ordinance. Turning now to consider the evidence, there is only the evidence of the parties as to the facts of the transaction and its surrounding circumstances and no witnesses were called as to these material issues. The loan itself is not disputed but the parties do not agree as to the principal and interest. It is also proved by the evidence of the police [p. 1122] of [1968] GLR 1120 officer called by the plaintiff that the plaintiff was a licensed money-lender at the material period of the mortgage. Again it is not disputed by the defendant that he mortgaged the several farms and the house to the plaintiff to secure the loan and that the house was family property; that the family did not know or give their consent to the mortgage of the house; and that the loan was his personal debt. On the evidence I find these matters proved and further find it proved that the defendant, on his own admission swore to the affidavit, exhibit A. The plaintiff ‘s evidence is that the principal sum lent to the defendant was £G382 10s. with interest of £G67 10s. He did not admit that he knew that the mortgaged properties were not the self-acquired properties of the defendant or that they were family properties. He said the document on the loan transaction, exhibit C, the mortgage deed, was prepared by the defendant who subsequently gave him a copy. The defendant also served an affidavit on him, exhibit A, in respect of the mortgaged properties. The defendant did not repay the loan and the interest and the plaintiff then attached these properties and exercised the power of sale in the mortgage. The house, the subject-matter of the mortgage, was sold. The plaintiff was later sued by the family of the defendant on the ground that the properties did not belong to the defendant. The sale was therefore set aside and the plaintiff had to reimburse the purchaser in the sum of £G305 and he also paid the costs of the action and damages of 60 guineas and £G25 respectively. The judgment in the action of the defendant’s family to set aside the sale was tendered as exhibit B. The plaintiff admitted in cross-examination that he knew the defendant quite well and knew his family connections. He denied that the amount lent was £G300 with interest of £G150. He admitted however that the mortgaged properties were sold to his nephews Kojo Fordjour and Adu Gyamfi, the house to Fordjour and the seven farms to Adu Gyamfi. He would not say how much these properties were bought for and said that sales accounts were prepared by the auctioneer and sent to the defendant. The defendant, he admitted, was the Adontenhene of Onwe and lives in the mortgaged house where he has his black stool, which is a family stool. He denied that the sale was not properly conducted or that the farms alone could have realised N¢2,000.00 if there had been a proper sale. The defendant in his evidence admitted the mortgage and affidavit. He also admitted that he had made untrue statements as to the ownership and family character of the house, the subject-matter of the mortgage. He did not dispute that he knew these statements were false. He contended however that these false statements were made in concert with the plaintiff and upon his suggestion and that as he [p.1123] of [1968] GLR 1120 put it, “the plaintiff knew all about it.” Again the defendant put his own position thus: “I agreed to it because the plaintiff and I were so close and knew no one would know about it,” and the following questions and answers are revealing:

“Q. why did you mortgage a house which was a family house for your own private debt?

A. The plaintiff told me there would be no trouble about the house. I knew that a mortgaged house could be sold if the debt was not paid.

Q. Did you think that if you did not pay the debt the plaintiff would not sell the house because you were friends?

A. I knew that he would sell the house if I failed to pay.

Q.Why did you mortgage the house?

A. I have mortgaged it already. I agreed to the document because the plaintiff said he would use the house and I agreed.”

The defendant put the principal at £G300 with interest of £G150 and said that the mortgage was prepared by the plaintiff in Kumasi, and both of them came to Kumasi to have the document prepared. He did not accept a suggestion put to him that the house was a small village compound house worth not more than £G150 and he put the value in 1958 at £G800. The defendant denied that he had defrauded the plaintiff in that he did not intend to deceive the plaintiff.

On the evidence of both parties it is not disputed that the defendant made false representations to the plaintiff and that he knew these representations were false.

The action is in tort for damages for deceit as well as for the unpaid balance of the loan. To sustain the tort the plaintiff will have to prove not only that the defendant made representations as to existing facts which were false to his knowledge but also that he intended that the plaintiff should act on the false representations and be deceived by them. There must be proved an actual intention to deceive the plaintiff. Then the plaintiff must go on to establish that he was influenced by the misrepresentation, to his detriment. What is required is proof that he suffered damage as a result of the misrepresentation: that is, that the one event caused the other and that he relied upon the truth of the representation. Clearly if the plaintiff knew that the representation was false, and a fortiori where he had himself induced the making of the representation or had acted in concert with the defendant to defraud a third party, the plaintiff cannot succeed since he was not deceived and did not in any case rely on the representation. Again there must be damage to the plaintiff and this must be proved to be the consequence of his acting on the representation. [p.1124] of [1968] GLR 1120

The main issues in dispute in respect of the plaintiff ‘s claim are whether or not the defendant’s false representation was intended to be acted upon by the plaintiff, namely whether the defendant had the intent to deceive the plaintiff, whether the plaintiff was influenced by the false representation, i.e. whether the defendant’s fraud was an inducing cause of the transaction and that it produced in his mind an erroneous belief influencing his conduct and whether the plaintiff at all suffered damage in consequence of acting on the false representation. To determine these issues it is necessary to consider whether as contended by the plaintiff he was not aware that the ownership of the property was not in the defendant or whether as contended by the defendant, the plaintiff knew all about it and had himself set it all in motion. As I have already indicated the evidence as to these and all other issues of fact in dispute is that of the parties themselves, and the determination of these issues will involve to a large extent the credibility of either party.

The sum lent was not less than £G300 and although in the circumstances of today that amount of money would seem rather small, I am prepared to hold that in 1958 a loan of £G300 by a village moneylender would have been, to all parties concerned, a fairly substantial loan, and it seems to me that a moneylender would have required adequate security in respect of the loan to safeguard his interest. I do not see much point in taking a mortgage on property which, to the knowledge of the mortgagee, could not lawfully be sold by him if the loan was not repaid. Moneylenders are by custom or inclination hardened men of business and I find it most unlikely that such an utterly worthless mortgage would have been agreed to, let alone suggested by a moneylender. I do not consider the plaintiff a bad businessman who would be prepared to sacrifice his own business interests at the altar of friendship. My impression of the plaintiff does not enable me to place him in any category other than that of a hard businessman not different in any manner apparent to me from the ordinary licensed moneylender. The plaintiff did not admit any such conspiracy as the defendant alleged. It was of course in his interest to deny as indeed it was in the interest of the defendant to make the allegation. In choosing between the rival stories I find that apart from the inherent improbability of the defendant’s contention as to the conspiracy, there is the much more definite matter of the impression made on me by these two old men. The plaintiff I found to be generally positive in his evidence although he had one or two bouts of silence or forgetfulness. On the main issues of fact however I found him impressive and sure of his stand. I certainly did not find anything to his material disadvantage in the matter of assessing his [p.1125] of [1968] GLR 1120 creditworthiness. The defendant on the other hand started off with the distinct handicap of having been party to a mortgage and an affidavit which to his knowledge contained material untruths. He had knowingly sworn to material falsehoods with the utterly selfish motive of obtaining a private advantage. In other words the defendant is in the position of a self-confessed liar and a man who had falsely sworn an oath. In this connection it matters not whether the idea emanated from the plaintiff or not. The defendant knew the properties were not his and it seems reasonably clear that he must have known that without security he would not obtain a loan of that size. Again the defendant’s cross-examination revealed him as a man whose word should be taken with caution. He did not impress me as truthful in his answers and my view of him as a witness does not enable me to prefer his evidence to that of the plaintiff. Of these two parties I find myself in the position that I prefer the plaintiff’s evidence, wherever it is contradicted by the defendant. There is the following significant cross-examination of the defendant:

“Q. You know what an affidavit is?

A. I have heard the word but I do not know what it stands for.

Q. Have you sworn to an affidavit before?

A. Yes, I have.

Q. Do you know that when you swear to an affidavit it means that you are swearing to the truth of the facts in it?

A. One does not swear to an affidavit if the facts are not true.

Q. You swore in the affidavit that the loan was £G382 10s. with interest of £G67 10s.

A. I did not swear to that in the affidavit. I swore to a loan of £G300 with interest of £G150.”

The affidavit is in evidence and does not support the defendant. In my view the evidence of the defendant in respect of this matter contains material untruths, and I got the impression strongly that he did try in the first place to deny that he knew what an affidavit was.

I am satisfied that the plaintiff has established that he was not a party to the making of the false statements and that he did not know these statements were untrue. I find that he has discharged the burden on him to prove that the defendant’s false representation was intended to be acted upon by him and that the defendant intended to deceive the plaintiff. I find that the plaintiff acted on these representations to his detriment and that he would not have entered into the loan transaction if he had known that the defendant had no rights over the mortgaged properties. I find that the mortgage deed and the affidavit were prepared by the defendant and that he well knew the contents thereof. [p.1126] of [1968] GLR 1120

I find that the plaintiff suffered damage as a result of his reliance on the defendant’s false representations. The debt remains unpaid and the plaintiff must have had to incur legal and other necessary expenses in the course of the litigation with the defendant’s family over the mortgaged property. When the sale was set aside, the plaintiff had to refund the purchase price and that he would not have had to do if the mortgaged property was owned by the defendant. The plaintiff has proved his claim in deceit and is entitled to damages to compensate him for the loss suffered by him. The plaintiff will have judgment on his claim for general damages which I assess at N¢1,000.00. Turning now to the defendant’s counterclaim, the matters to be proved by the defendant are that the mortgage deed did not state the correct principal and interest, that the interest is excessive, that there were irregularities in the sale of the mortgaged property; that the sale itself was at an undervalue or was made to plaintiff himself through his nephew. Apart from the defendant’s own evidence on these matters there is nothing to lend any colour of truth to the defendant’s case. His own affidavit does not support him and although I find it worthy of notice that the principal and interest appear rather unusual, i.e. £G382 10s. and £G67 10s., I do not think that matter is sufficient to enable a finding to be made in favour of the defendant that these figures do not represent the true figures. I find that the defendant has not established this matter or the matter of excessive interest. Again I find the claim that the sale was irregular not proved, and I would not accept the oath of the defendant to establish these matters. I do not accept that sale was at an undervalue or was made to the plaintiff himself through his nephews. The defendant said that the value of the house was £G800 but then there is no evidence as to the particulars of the house from which the court can come to a conclusion as to its value. In any case the sale was by public auction and the matter of undervalue cannot avail the defendant. In this connection I find no material significance in the fact that the properties were bought by the nephews of the plaintiff. There is no evidence that these persons were not able in their own right to purchase the properties or that they bought them for the plaintiff. The defendant of course said so but then that is no proof of these matters. I reject the defendant’s counterclaim and dismiss it and enter judgment on it for the plaintiff. I award costs of N¢200.00 to the plaintiff inclusive.

DECISION

Judgment for the plaintiff

L. F. A.