NDK FINANCIAL SERVICES LTD. vs. JOGIS LIMITED AND 2 OTHERS [2008]DLCA6542

Date	2008-06-12
Suit No.	CIVIL APPEAL H1/62/2008
Citation No.	[2008]DLCA6542

QUAYE J.A. [PRESIDING]

ANIN YEBOAH J.A.

MARIAMA OWUSU J.A

MR. PEASAH-BOADU FOR THE PLAINTIFF/RESPONDENT

MR. CHARLES WILLIAM ZWENNES FOR DEFENDANTS/APPELLANTS

[2008]DLCA6542
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													<main id="main" class="content" style="min-height: 60rem" >NDK
FINANCIAL SERVICES LTD.<o:p></o:p>(PLAINTIFF/RESPONDENT)<o:p></o:p>vs.<o:p></o:p>JOGIS
LIMITED AND 2 OTHERS<o:p></o:p>(DEFENDANTS/
APPELLANTS)<o:p></o:p>[COURT OF APPEAL, ACCRA]<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 1.0pt 0in">

<p class="MsoNormal" align="center" style="margin-bottom:0in;margin-bottom:.0001pt;
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padding:0in;mso-padding-alt:0in 0in 1.0pt 0in">CIVIL
APPEAL H1/62/2008&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;DATE: 12TH JUNE, 2008.<o:p></o:p>

<p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align:
justify;line-height:115%;border:none;mso-border-bottom-alt:solid windowtext 1.5pt;
padding:0in;mso-padding-alt:0in 0in 1.0pt 0in">MR. CHARLES WILLIAM
ZWENNES FOR DEFENDANTS/APPELLANTS <o:p></o:p>

<p class="MsoNormal" style="margin-bottom:0in;margin-bottom:.0001pt;text-align:
justify;line-height:115%;border:none;mso-border-bottom-alt:solid windowtext 1.5pt;
padding:0in;mso-padding-alt:0in 0in 1.0pt 0in">QUAYE, J.A. [PRESIDING]
ANIN YEBOAH, J.A. AND MARIAMA OWUSU, J.A.<o:p></o:p>

</div>QUAYE,
J.A. <o:p></o:p>The
pleadings in this case and the evidence led in the trial court as well, showed
that the respondent herein are a registered and licensed non-banking financial
institution engaged in lending money on short term basis to the business
community in Ghana. The 1st defendant/appellant is an incorporated estate
development company. Between the period dating from December, 2001 to July
2005, the respondent and the appellant entered into agreements by which the
respondents granted loan facilities to the appellants. According to the respondents,
the appellants defaulted or failed to liquidate the debts thus accrued, to the
extent that as at 4th May, 2006 the appellants’ indebtedness to the respondents
stood at ¢2.334,849,269.00; that is to say two billion, three hundred and
thirty four million, eight hundred and forty-nine thousand two hundred and
sixty-nine cedis only. <o:p></o:p>Pleadings
were exchanged, issues were joined, and the defendants/appellants filed a
counter-claim. The relief filed by the respondent was for an order upon the
appellants to pay the said amount endorsed on the writ of summons together with
interest thereon at the contractual rate of 6.5% per month calculated on a 30
day per month basis on all outstanding balances from 4th May, 2006 until the
date of final payment. The appellants’ counterclaim was for a “declaration
under clause 3[2] of the Loans Recovery Ordinance, 1918 CAP.175, that the
interest charged by the respondents in respect of the sums actually lent and
the amounts charged as punitive penalty rates in events of default have
ultimately rendered the facilities altogether harsh, inequitable,
unconscionable and offensive to the protective statute” <o:p></o:p>At
the trial, evidence was led on behalf of the plaintiffs/respondents by their
Business Development Manager by name Mac Robert Kito. His evidence showed that
a total of nine loan facilities were granted by the plaintiffs/respondents to
the defendants/appellants over the stipulated period. Out of the nine, only
three were outstanding as at 30th September, 2006. Those were the transactions
that were executed in favour of the appellants in September, 2003 for an amount
of ¢100,000,000; in November, 2003 for ¢120,000,000.00; and lastly March, 2004
¢200,000,000.00. All the facilities granted were evidenced in writing in the
form of approval letters wherein the terms and conditions for the loan were
clearly set out. The said terms and conditions were, at each time accepted by
the appellants herein. The approval letters relating to the transactions of
September and November, 2003, and that of March, 2004 were tendered in the
trial as exhibits ‘A” A1 and A2. These exhibits were in common form with
similar provisions running through them. Each recited the amount of loan
granted, the purpose for which the money was taken by the appellants, the
interest rate exigible, expiry date, security provided. In addition, there was
a default clause and directors’ guarantee. The guarantees were provided by the
2nd and 3rd defendants/appellants for the due liquidation of the sum taken and
an undertaking in case of default of payment, to pay all sums of money advanced
to the appellants at compound interest. <o:p></o:p>The
default clause, contained a provision binding the borrowers to pay total legal
and other expenses incurred by the lenders/respondents herein in litigation to
recover the outstanding debts. Exhibit ‘1’ was a more elaborate contract
agreement, albeit, on the same terms as exhibits ‘A’, ‘A1’ and ‘A2’. By 30th
September, 2006, the outstanding debt had increased to ¢2,600,000,000.00. A
statement of accounts showing the transactions of the appellants was tendered
as exhibit ‘B’. Even though there was a provision for the imposition of penalty
in the event of a default on the part of the appellants, this provision was
never taken advantage of, nor invoked by the respondents. On the other hand,
however, the respondents reduced the interest rate from 6.5% to a flat or
uniform rate of 6% per 30 days month. <o:p></o:p>The
defendants/appellants did not dispute the fact that they took loans from the
respondents, nor the fact that they owed the respondents on the loans
contracted. Their contention was that the terms of the transactions were
unfair, and unconscionable. <o:p></o:p>