AHENFIE CLOTH SELLERS ASSOCIATION vs. PHILOMENA MENSAH, TINA MAVIS DODD, DAVID AFRIYIE AND BEN MENSAH [2010]DLSC2545

AHENFIE CLOTH SELLERS ASSOCIATION vs. PHILOMENA MENSAH, TINA MAVIS DODD, DAVID A... [2010]DLSC2545

Date	2010-07-21
Suit No.	CIVIL APPEAL NO. J4/7/2010
Citation No.	[2010]DLSC2545

BROBBEY JSC (PRESIDING)

ANSAH JSC

OWUSU (MS) JSC

YEBOAH JSC

ARYEETEY JSC

GEORGE ABORGAH FOR THE DEFENDANTS/APPELLANTS/APPELLANTS.

F. K. YEBOAH FOR THE PLAINTIFF/RESPONDENT/RESPONDENT.

[2010]DLSC2545
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													<main id="main" class="content" style="min-height: 60rem" >AHENFIE CLOTH SELLERS
ASSOCIATION<o:p></o:p>vs.<o:p></o:p>PHILOMENA MENSAH, TINA
MAVIS DODD, DAVID AFRIYIE AND BEN MENSAH<o:p></o:p>&nbsp;[SUPREME COURT, ACCRA]<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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CIVIL APPEAL NO. J4/7/2010&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;DATE: 21ST
JULY, 2010<o:p></o:p>

</div>COUNSEL:&nbsp;&nbsp; <o:p></o:p>GEORGE ABORGAH FOR THE
DEFENDANTS/APPELLANTS/APPELLANTS.<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">

F.
K. YEBOAH FOR THE PLAINTIFF/RESPONDENT/RESPONDENT.<o:p></o:p>

</div>CORAM:
<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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BROBBEY
JSC (PRESIDING), ANSAH JSC, OWUSU (MS) JSC, YEBOAH JSC, ARYEETEY JSC&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; <o:p></o:p>

</div><o:p>&nbsp;</o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
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JUDGEMENT<o:p></o:p>

</div>BROBBEY
JSC: <o:p></o:p>This is the unanimous decision of the court. In
this judgment, the appellants shall be referred to as the defendants while the
respondent will be referred to as the plaintiff or the plaintiff association. The
bare facts which gave rise to this litigation were as follows: The plaintiff is
an association of which the PW1 is the president. According to the PW1, the
association was formed with the aim of sourcing loans for its members because
the members found it difficult to source loans for their businesses if they
sourced the loan as individuals. The association was registered as a company
limited by guarantee. The 1st, 2nd and 3rd
defendants denied that they were members of the Association but the plaintiff produced
evidence to prove that they were members.<o:p></o:p>The association obtained a loan of three billion
old Cedis from the Ghana Commercial Bank for use by its members. The first
defendant applied for and was given three hundred million old Cedis as a loan
which was guaranteed by the second, third and fourth defendants. The three
billion Cedis was to have been paid to the bank within a period of 52 weeks and
it attracted interest of 29 per cent per annum. The plaintiff did not state the
exact rate of interest attracted by the loan to the first defendant. The 1st
defendant was to have repaid her loan of three hundred million Cedis at the
rate of nine million Cedis per week but within the same 52 weeks. At the rate
of nine million Cedis per week, the 1st defendant would have paid four
hundred and sixty eight million Cedis within the 52 weeks. The 1st
defendant paid the weekly nine million Cedis for 21 weeks, after which she stopped
or failed to pay any more money to the plaintiff. The plaintiff therefore took
action against her and the other defendants in their capacities as guarantors
for the recovery of 279 million Cedis which she alleged was the balance owed on
the three hundred million Cedis loan. That transaction between the plaintiff
and the defendants was evidenced by exhibit A.<o:p></o:p>The parties do not dispute that by the agreement
on the facility given to the first defendant, she was to have paid GH¢46,800.00
from the GH¢30,000.00 loaned to her. The difference was GH¢16,800.00.&nbsp; By simple
arithmetical calculation, the difference of GH¢16.800.00 on the GH¢30,000.00
amounted to 52 per cent. That included the 29 per cent charged by the bank. In
other words, the Association charged 52 per cent for lending the GH¢30,000.00
to the first defendant. If the 29 per cent were to be deducted from the 52 per
cent, the plaintiff would have charged 23 per cent as interest on the amount
lent to the first defendant.<o:p></o:p>At the trial court, the defendants contended that “the terms, interest and other charges
levied on the said loan are harsh, excessive and unconscionable in terms of
the Loans Recovery Ordinance, Cap
175(1951 Rev.).” In further answer to the claim, the defendants averred
that the transaction was “illegal and
unenforceable in terms of the Money
lenders Ordinance, Cap 176.” They therefore counterclaimed that the loan
transaction was illegal and unenforceable in terms of the Moneylenders
Ordinance Cap 176 and for an order “re-opening
the transaction on the ground that the interest and charges were excessive,
harsh and unconscionable.”<o:p></o:p>The trial High Court gave judgment in favour of
the plaintiff. The defendants appealed against the judgment to the Court of
Appeal where they lost to the plaintiff again. It was against the judgment of
the Court of Appeal that the defendants have appealed to this court, initially
on two grounds, to which were added three more grounds. The five grounds will
be read out as and when they are discussed in this judgment.<o:p></o:p>APPLICABLE
LAWS<o:p></o:p>The law on money lending in Ghana has been
discussed in a number of cases, particularly in Yeboah v Bofour [1971] 2 GLR 199, Ayiwah v Badu [1963] 1 GLR 96, SC and Dua v Afriyie [1971] 1 GLR 260, all of which were based on the Money
lenders Ordinance, Cap 176 and the Recovery of Loans Ordinance, Cap 175. Cap
176 was repealed in 2008 by the Non Bank Financial Institutions Act, 2008 (Act
774), s. 47(1). However, since the 1992 Constitution prohibits retroactive
legislation, Act 774 cannot retroactively affect transactions which took place
before the coming into force of that Act. The transaction involved in the instant
case took place in 2004. </main>