a. The sum of GH₵207,306.66 being outstanding balance in respect of the loan granted 1^st defendant.

b. Interest on (a) at the monthly rate of 6.5% per month from March 10^th, 2014 till date of final payment.

c. Cost

d. Attorney‘s fee being 10% of the sum owed.

e. Judicial sale of the 3^rd defendant’s landed properties assigned to plaintiff and which properties are described in paragraph 8 of the statement of claim.

An appearance was entered and later statement of defence filed jointly by the 1^st and 2^nd defendants and separately by the 3^rd defendant after service of the writ and statement of claim. The plaintiff filed a reply. After the failure of pre-trial settlement, the matter was set down for hearing. The plaintiff gave evidence per its representative and called witnesses to close its case. The 2^nd defendant gave evidence for himself and on behalf of the 1^st defendant and closed its case. The 3^rd defendant also gave evidence and announced the closure of his case thereafter.

From the pleadings filed by the parties the court finds and holds that the following facts are not in issue as a result of admission by the defendants.

It is not in dispute that the 1^st defendant is a limited liability company incorporated in Ghana and in the business of the financial services consulting, money transfer services and business development services. The court also finds that by a letter dated 30^th day of July, 2012, exhibit A herein, the first defendant applied to the plaintiff for a credit facility of Gh₵300, 000.

That by an offer letter dated 13^th of August, 2012, exhibit B herein, the plaintiff approved a loan of GH₵300, 000 for the 1^st defendant on the terms and conditions contained in the said letter. Again the court finds as a fact that by a credit facility agreement dated the 15^th August, 2012, exhibit C herein, the 1^st defendant was granted a loan of GH₵300,000 to augment its working capital. The parties agree that the said loan was to attract interest at the rate of 6.5% per month.

It is also not in dispute that the loan granted to the 1^st defendant together with the interest was to be repaid within a period of 12 months to expire on the 15^th of August 2013.

The Court finds that the defendants admit that it was a term of the loan agreement that upon default of the monthly repayment agreed upon the 1^st defendant would pay a penalty charge of 10% per month.

It is also admitted by the 1^st and 2^nd defendants that as a security for the repayment of the loan the 2^nd defendant assigned his property known as House No. 12 East Legon Ambassadorial Enclave to the plaintiff.

The court finds as a fact that as an additional security for the repayment of the loan the 1^st defendant, by a deed of assignment dated 15^th August, 2012, assigned to the plaintiff herein, its interest in a Nissan Patrol vehicle with registration number GN 3625 Y as shown by exhibit E herein. Again the 1^st defendant assigned its interest in Mercedes Benz car with registration number GT 7286 Z to the plaintiff.

Again, it is not disputed by the 1^st and 2^nd defendants that the parties agreed that in the event of default of repayment the plaintiff could sell the assigned vehicles to offset or reduce the indebtedness of the 1^st defendant.

It is also admitted by the 1^st and 2^nd defendants that, as an additional security for the repayment of the loan, the 2^nd defendant executed a personal guarantee dated the 15^th day of August, 2012, exhibit D herein, by which he personally undertook to be liable for the repayment of the loan granted to the 1^st defendant.

Finally, the court finds as a fact from the pleadings that, as security for the repayment of the loan, the 3^rd defendant, by deeds of assignment dated the 15^th day of August, 2012, assigned his interests in all that property situate at North Kaneshie known as parcel number 107 block 7 Section 047 and covered by land title certificate number GA 35329 volume 23 Folio 123 as well as all that property situate at North Industrial Area known as parcel number 41 block 5 section 46 and covered by land title certificate number GA 1881 volume 42 Folio 1.

Throughout the trial the most thorny issue that engaged the attention of the parties herein was whether or not the interest exigible, that is whether the 6.5% per month interest agreed by the parties was to be charged on the amount of GH₵300,000 every month and debited to the account of the 1^st defendant or whether it was to be calculated on the reduced balance on the GH₵300,000 every month.

This is clearly borne out from the answers given by the 2^nd defendant in his evidence in chief as captured below:

“Q: When did you make the first installment payment?

A. We made the first payment on the 27th of September, 19,500.

Q. And then when did you make the second payment?

A. The second payment was made on the 30th of October, 2012 – 19,500.

Q. So up till this time, you would agree with me that the outstanding balance was still GH¢300,000?

A: Yes my lord.

Q: Can you tell us when you made the third payment?

A. We made the third payment on the 12th of December, 2012 – 49,500 being 19,500 for the interest and 30,000 for the principal.

Q. So in your estimation, in the fourth month, what should have been the interest chargeable on your outstanding balance?

A. Interest should have been charged on the GH¢270,000 - that is 300,000 less 30,000 and this will be 270,000 at 6.5%.

Q: Was that done?

A. My lord that was not done.

Q. What was done?

A. They consistently applied 19,500 as 6.5% on the 300,000 instead of 270,000.

Q. In the fourth month, what happened?

A. The same thing happened – we paid 30,000 and we were expecting that the balance would have come down to 240,000. And the interest applied on 240,000 should have been something different and not 19,500.”

Q: But what happened?

A: They charged 19,500 i.e. 6.5% on the 300,000.

Q: So what is the effect of this calculation of interest on your balances?

A. It means that as far as the Plaintiff was concerned they had given us 300,000 and whatever payments we were making was not recognized. The 30,000 we were paying was not recognized by them so we did not have any benefit paying the 30,000 every month.”

Clearly, the contention of the defendants is that the interest of 6.5% should be calculated on the reduced balance of the principal loan advanced to the 1^st defendant. On the contrary, the plaintiff maintains that the reckoning of the monthly interest ought to be worked on a fixed straight line and that the amount of interest is fixed till the debt is completely repaid. The following evidence by the plaintiff’s representative leaves the court in no doubt as to the position of the plaintiff as far as the calculation of the monthly interest is concerned.

“Q: Mr. Richard Amoah, from your evidence it means the amount of loan granted was

GH¢300,000?

A. My lord, yes.

Q. The agreed interest rate was 6.5% per month?

A. You are right, my lord.

Q. And 6.5% per month of GH¢300,000 works out to GH¢19,500?

A. My lord, yes, per month.

Q. So if he pays GH¢19,500 per month at the agreed rate and agreed time the principal of GH¢300,000 would be paid after the 12th month – is that correct?

A. My lord, the principal is spread over 12 months. My lord, the interest like you mentioned is 6.5% (i.e. GH¢19,500). And this GH¢19,500 is paid each month for 12 months. Now, the principal of GH¢300,000 per the schedule based on the Defendants’ strength was divided for 10 months. So the 1st month, he pays GH¢19,500, the 2nd month he pays GH¢19,500 and the 3rd to the 12th month he paid GH¢49,500 being an interest of GH¢19,500 and a principal of GH¢30,000.

Q. I am putting it to you that if he pays in the manner that you have just explained the interest rate will be more than 6.5%?

A. My lord, that is not correct. My lord, if you calculate GH¢19,500 times 12 and you add GH¢300,000 to it that will be the figure you will have and it is not going to be more as what you are thinking.

Q. Let’s take it one by one – in the first month he was to pay GH¢19,500 – is that correct?

A. My lord, you are right.

Q. The GH¢300,000 will still be outstanding?

A. My lord, you are right.

Q. In the second month he paid GH¢19,500?

A. My lord, you are right.

Q. The outstanding balance will still be GH¢300,000?

A. My lord, you are right.

Q. In the third month he paid GH¢49,500?

A. My lord, you are right.

Q. That is GH¢19,500 as interest and GH¢30,000 as principal?

A. My lord, you are right.

Q. So at that point, what is the outstanding principal?

A. The outstanding principal has reduced to GH¢270,000 but the calculation of 6.5% based on the schedule is not going to be on GH¢270,000; It is going to be on GH¢300,000. My lord, per the agreement we had with the client, it is not a compound interest rate; it is a simple interest. 6.5% multiplied by 12 and then add it to the GH¢300,000 and spread it over the period. So my lord, the reduction in the principal does not affect the principal that has been agreed on.

Q. So what you want this court to understand is that, even though he has made part payment of the principal of GH¢30,000, you still went ahead to charge interest on the whole GH¢300,000?

A. My lord that is what we agreed on in the schedule.”

In the opinion of the court the resolution of this issue lies in a holistic construction of the document that governs the transaction between the plaintiff and the 1^st defendant. This document is principally the Credit Facility Agreement exhibit C herein. For, the law is that in ascertaining the intention of the parties to a document the document must be read and interpreted as a whole. Thus, in Chamber Colliery Ltd vs. Twyerould [1915] 1 Ch. 268 the court held that

“I find nothing in this case to oust the application of the well-known rule that a deed ought to be read as a whole, in order to ascertain the true meaning of its several clauses; and that the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed, if that interpretation does no violence to the meaning of which they are naturally susceptible.”

And in Boateng vs. Volta Aluminium Co. Ltd [1984-1986] 1 GLR 733, the Court of Appeal pointed out that

“In attempting to construe the termination provisions, regard should be had to all the four clauses, i.e. the language used and all the provisions in the termination clauses should be looked at as a whole and every clause must be compared with the other and one entire sense made out of them. It was only by so doing that the true meaning and the intention of the parties could be discovered.”

Exhibit C was executed by the plaintiff and the 1^st defendant on the 15^th August, 2012. In the said exhibit C, the principal amount advanced to the 1^st defendant is recorded as GH₵300, 000. The rate of interest is stated to be 6.5% per month. The term of the loan is said to be three hundred and sixty five days or twelve months to expire on the 15^th August, 2013. As far as the repayment of the loan and interest is concerned exhibit C states that

Twelve (12) monthly installments of GH¢19,500.00 (Nineteen Thousand Five Hundred Ghana Cedis) being interest for the first two months (September and October 2012) and GH¢49,500.00 (Forty Nine Thousand Five Hundred Ghana Cedis) for third month to the twelfth month (November 2012 to August 2013) being interest and Principal commencing September 15, 2012.

It is also stated in exhibit C that

Twelve (12) post-dated Cheques of GH¢19,500.00 (Nineteen Thousand Five Hundred Ghana Cedis) being interest for the first two months (September and October 2012) and GH¢49,500.00 (Forty Nine Thousand Five Hundred Ghana Cedis) for third month to the twelfth month (November 2012 to August 2013) being interest and Principal.

Under conditions precedent, paragraph 4(c) of exhibit C, states that:

Twelve (12) post-dated Cheques of GH¢19,500.00 (Nineteen Thousand Five Hundred Ghana Cedis) being interest for the first two months (September and October 2012) and GH¢49,500.00 (Forty Nine Thousand Five Hundred Ghana Cedis) for third month to the twelfth month (November 2012 to August 2013) being interest and Principal.

The cheque must be crossed and made payable to Ideal Finance Limited. IFL reserves the right to take legal action immediately any of the cheque is dishonoured due to lack of funds.

What is clear from these clauses in the agreement on the repayment of the loan of GH₵300, 000 advanced to the 1^st defendant is that the interest rate per month is 6.5% and that, this 6.5% is to subsist and paid by the 1^st defendant till the total amount of the principal is completely repaid. Again what these clauses mean is that the 1^st defendant agreed to pay to the plaintiff a constant amount in respect of interest for each of the twelve months which is the life span of the loan. Thus for each month beginning from September 15^th, 2012 right through to 15^th August, 2013 the 1^st defendant agreed to pay, in respect of interest, an amount of GH₵19,500. Regarding the repayment of the principal loan, the actual payment was not to commence from September 15^th 2012 when the payment of interest commences. Thus, whereas the payment of the interest element was to start from 15^th September, 2012 through to 15^th August, 2013 the repayment of the principal was postponed till the third month. The repayment of the principal was to begin from 15^th November, 2012 through to 15^th August, 2013. And, the amount repayable in respect of the principal was GH₵30,000 per month for a period of ten months.

For the avoidance of doubt what the clauses referred to in exhibit C implies is that the 1^st defendant agreed to pay in respect of the interest GH₵19,500 on the 15^th September, 2012; GH₵19,500 on the 15^th October, 2012; GH₵19,500 on the 15^th November, 2012; GH₵19,500 on the 15^th December, 2012; GH₵19,500 on the 15^th January 2013; GH₵19,500 on the 15^th February, 2013; GH₵19,500 on the 15^th March, 2013; GH₵19,500 on the 15^th April, 2013; GH₵19,500 on the 15^th May, 2013; GH₵19,500 on the 15^th June, 2013; GH₵19,500 on the 15^th July, 2013 and finally GH₵19,500 on the 15^th August, 2013.

To liquidate the principal, the 1^st defendant agreed to pay an amount of GH₵30,000 on the 15^th of

November, 2012; GH₵30,000 on the 15^th December, 2012; GH₵30,000 on the 15^th January, 2013; GH₵30,000 on the 15th February, 2013; GH₵30,000 on the 15th March, 2013; GH₵30,000 on the 15th April, 2013; GH₵30,000 on the 15th May, 2013; GH₵30,000 on the 15th June, 2013; GH₵30,000 on the 15th July, 2013 and finally GH₵30,000 on the 15th August 2013.

In order that a separate cheque may not be issued for the payment of the interest on the 15th November 2012 and the succeeding months till 15^th August 2013 and a separate cheque issued for the payment of the principal beginning 15^th November, 2012 and the succeeding months till 15^th August, 2013 the 1^st defendant agreed, in the relevant clauses in exhibit C, to issue one single cheque to cover the interest element as well as the principal element. That is why the parties agreed in exhibit C that the 1^st defendant will issue postdated cheques for the sum of GH₵49,500 “for the third month to the twelfth month (November 2012 to August 2013) being interest and principal.” Indeed, the amount of GH₵49,500 is equal to the sum of GH₵19,500 and GH₵30,000. Hence, from the third month, that is, from 15^th November, 2012 to 15^th August 2013, the 1^st defendant agreed to pay GH₵49,500 for each month.

It has been argued on behalf of the defendants that clause 3(a) (iii) of exhibit C enjoins the plaintiff to amortize the interest payable and therefore the interest payable should be calculated on the reducing balance. The said clause states that:

Interest payable under this facility will be amortized, and charged to your account in our books on monthly basis, in arrears. In the event of interest not being paid on due date, it will be compounded until paid.

In the opinion of the court the said clause does not bear the meaning being attributed to it by the defendants. Indeed the word ‘amortized’ used in the clause means nothing more than ‘calculated’. Thus what the clause seeks to say is that interest payable under the facility will be calculated and charged to the account of the 1^st defendant in the books of the plaintiff on a monthly basis in arrears.

There is evidence on record that the 1^st defendant was required to deposit postdated cheques for the payment of the monthly installments. For each of the first two months, 1^st defendant was required to deposit postdated cheques for the sum of GH₵19,500. And, beginning from the third month to the twelfth month 1^st defendant was required to deposit postdated cheques in the sum of GH₵49,500 for each of those months. This is an agreement which was executed by the 1^st defendant as shown by exhibit C herein. There is evidence to the effect that the 1^st defendant truly deposited the postdated cheques as agreed with the plaintiff. The only reason for this dispute was that the cheques were dishonoured by the bank when they were duly presented for payment. If the 1^st defendant’s contention that the interest was to be calculated on a reducing balance is true, then why did it present the postdated cheques for the agreed sum and why did it not present postdated cheques for sums reckoned on the reduced balances?

It is therefore not correct that the interest was to be calculated on the reducing balance of the principal debt as the defendants would want the court to believe. On the contrary, the agreed interest was a fixed amount, as stated above, to be paid for each month for the life of the loan beginning from 15^th September 2012 through to 15^th August 2013.The 1^st defendant has even admitted in exhibit S which it wrote to the plaintiff on the 12^th August 2013 that the “interest to be paid per month is GH₵19,500”. In the opinion of the court this admission made by the 1^st defendant, per exhibit S, corroborates the case of the plaintiff on this issue. See Tsrifo vs. Duah VIII [1959] GLR 63 @ 64-65. That is the essence of the agreement entered between the plaintiff and the 1^st defendant and it ought to be placed on record that the agreement exhibit C herein is binding on the parties including the 1^st defendant. Parties to a written contract are bound by the terms of their agreement and in the absence of fraud or misrepresentation they cannot be permitted to resile from that which they have mutually agreed upon. See L’Estrange vs. Graucob [1934] 2 KB 394 @ 403 and Inusah vs. DHL Worldwide Express [1992] 1 GLR 267.

Because of the wrong view which the 1^st defendant took of the agreement between it and the plaintiff, the 1^st defendant is on record to have stated on the 4^th March 2015 in its evidence in chief that it suspended the repayment of the loan as agreed at a point in time. Indeed, the court finds as a fact that right from the onset of the repayment of the loan and the agreed interest thereon the 1^st defendant was in breach of its obligation to pay. From the evidence on record the court finds that there was never a time that the 1^st defendant repaid the principal and the interest in accordance with the agreement. The following answers given by the representative of the 1^st defendant in his evidence in chief on the 4^th March, 2015 support this finding of fact:

“Q: So you were granted this facility. Did you start servicing your loan?

A. Yes my lord, we did not only start but we serviced the loan according to the terms of the agreement.

Q. When did you make the first installment payment?

A. We made the first payment on the 27th of September, 19,500.

Q. And then when did you make the second payment?

A. The second payment was made on the 30th of October, 2012 – 19,500.

Q. So up till this time, you would agree with me that the outstanding balance was still GH¢300,000?

A. Yes my lord.

Q. Can you tell us when you made the third payment?

A. We made the third payment on the 12th of December, 2012 – 49,500 being 19,500 for the interest and 30,000 for the principal.”

The agreement, exhibit C, demanded that the first repayment of interest in the sum of GH₵19,500 should be paid on the 15^th September, 2012 but in his evidence quoted above, the 1^st defendant admitted that it paid this amount on the 27^th September, 2012. The second repayment of interest was, according to exhibit C, to be paid on the 15^th October, 2012 but the 1^st defendant admitted that it paid this sum on the 30^th October 2012. The third repayment made up of the interest element and the principal element was to have been paid, according to exhibit C, on the 15^th November, 2012 yet the 1^st defendant says it paid this amount on the 12^th December, 2012. All these payments are captured in the Loan Statement of the 1^st defendant issued by the plaintiff and received in evidence as exhibit K.

The court holds therefore that the 1^st defendant was not being truthful to the court when it stated above in its evidence in chief that “we did not only start but we serviced the loan according to the terms of the agreement.” The court finds, on the contrary, that the 1^st defendant never serviced the loan according to the terms of the agreement. Indeed, the admission of the 1^st defendant above as to the time it even made some payment corroborates the plaintiff’s assertion that the 1^st defendant defaulted in the payment of the loan in accordance with the agreement and hence the court has no reason to reject the position of the plaintiff on the issue of default by the 1^st defendant. For the law is clear as stated in Asante vs. Bogyabi [1966] GLR 232 at 240 that:

“Where admissions relevant to matters in issue between parties to a case are made by one side, supporting the other, as appears to be so in the instant case on appeal, then it seems to me right to say that that side in whose favour the admissions are made, is entitled to succeed and not the other, unless there is good reason apparent on the record for holding the contrary view”

According to the plaintiff, the default of the 1^st defendant in servicing the loan in accordance with the agreement, exhibit C herein, has resulted in the debt of GH₵207,306.66 which the 1^st defendant owes and which is claimed therefore by the plaintiff on its writ of summons. Indeed this indebtedness is amply supported by exhibit K the loan statement of the 1^st defendant. The court holds that the 1^st defendant is indebted to the plaintiff in the above sum. Judgment is therefore entered for the plaintiff in the sum of GH₵207,306.66. The plaintiff shall also recover interest at the rate of 6.5% per month from March 10^th 2014 till date of final payment.

SEIZURE AND SALE OF CARS

The plaintiff has averred in its statement of claim that upon the default of the 1^st defendant, the plaintiff seized two vehicles which the 1^st defendant had assigned to the plaintiff as security for the repayment of the loan. These vehicles were subsequently sold by the plaintiff and the proceeds credited to the accounts of the 1^st defendant. The defendants have taken issue with the plaintiff on the seizure and sale of the vehicles. Defendants say that the seizure and the sale of the vehicles were wrongful and unlawful because at the date of seizure, that is 22^nd April, 2015 the 1^st defendant did not owe the plaintiff. The 1^st defendant therefore counterclaims for

“a) GH¢1,250.00 per day for unlawful possession and unlawful use of 1st Defendant’s two vehicles mentioned in the claim for 11 months.

b) Return of 1st Defendant’s vehicles/damages for conversion.

c) Rescission of Agreement for illegality.

d) GH¢500,000 general damages for trespass and unlawful occupation of 2nd defendant’s house.”

Although the 1^st and the 2^nd defendants have, at paragraph 6 of their statement of defence and, in respect of the 3^rd defendant, at paragraph 8 of his statement of defence, averred that the seizure of the two vehicles took place in April 2015, the court finds that the date given by the defendants cannot be correct. Indeed, the 1^st and 2^nd defendants have stated to the contrary in their evidence in chief that the said seizure took place in April 2013. This date accords with the date given by the plaintiff in its evidence as the date of seizure.

The defendants say the seizure was unlawful because by the date of seizure the 1^st defendant had paid interest in the sum of GH₵157,000 to the plaintiff and that the 1^st defendant did not owe the plaintiff. An examination of exhibit K shows that by the end of April 2013 the 1^st defendant had paid the interest of GH₵19,500 per month for only five months amounting to a total of GH₵97,500. By the terms of the agreement the 1^st defendant was expected to pay the sum of GH₵19,500 for each of 15^th September 2012; 15th October 2012; 15^TH November 2012 15th December 2012, 15th January 2013; 15th February 2013; 15th March 2013 and 15th April 2013 making a total expected payment of GH₵156,000. Hence, as far as the payment of even the interest was concerned the 1^st defendant was in serious default by April 2013 when the vehicles were impounded by the plaintiff.

The argument presented by the defendants on the seizure of the vehicles create the impression that the right of the plaintiff to seize the vehicles was limited to only default in the payment of the interest element on the loan. This impression is not borne out of the agreement entered by the parties. Exhibits E and F constitute the agreement on the assignment of the vehicles by the 1^st defendant to the plaintiff. Clauses 4(a) and (c) of these exhibits contain similar provisions. It is provided in exhibit E clause 4 (a) (c) that:

“That if default is made in the payment of any amount due for repayment for a period of one (1) month, the Lender reserves the right to seize and take possession of the Vehicle and the whole of the balance of the said amount outstanding plus all costs, charges and expenses properly incurred hereunder by the Lender together with interest thereon at commercial rate of interest applicable at the time of such default shall become due and payable forthwith”

The court therefore finds that the right of the plaintiff to ‘seize and take possession of the vehicles’ was not limited to a situation where the 1^st defendant has defaulted in the payment of the interest element only but ‘if default is made in the payment of any amount due for repayment for a period of one (1) month, the plaintiff reserves the right to seize and take possession of the vehicles’ used as security by the 1^st defendant.

The court also finds from exhibit K that not only was the 1^st defendant in default of the payment of interest, as at April 2013 when the vehicles were seized, but the 1^st defendant was also in serious default in respect of the repayment of the principal.

If it is true that the 1^st defendant was not in default of its obligations under the agreement then why did the 1^st defendant write exhibit L to the plaintiff on the 24^th May 2013 in which it promised to ‘pay off the outstanding balance’? Again why did the 1^st defendant write exhibit S on the 12^th August, 2013 to the plaintiff in which it stated that “our inability to have kept faith with the postdated cheques we issued was due to circumstances beyond our control. Whilst, this can be normal in business we are committed to settle the outstanding balance as soon as possible”? The court pauses at this stage to question the sincerity of the 1^st defendant when it wrote exhibit S. The court wonders whether a person who is ‘committed to settle the outstanding balance’ would wait till he is taken to court on the same debt.

Again the court finds that on the 19^th April, 2013, three days before the vehicles were impounded by the plaintiff, the 1^st defendant wrote to the plaintiff and stated in exhibit T that:

“Following our discussions on our loan, we wish to assure you that we are committed to paying off the loan within the agreement period and also taking steps to settle any outstanding installments. 

In this regard we are requesting to pay the overdue amounts in May and June to bring back the repayments in line for the remaining period. 

Find attached two post-dated cheques for May and June to effect this.”

Again, if it is true that the 1^st defendant was not indebted to the plaintiff by the 22^nd April 2013 when the vehicles were seized why did the 1^st defendant write exhibit T and make admissions to ‘overdue amounts’ which it promised to pay in May and June ‘to bring back the repayments in line for the remaining period’? The court finds that the 1^st defendant’s representative in the person of 2^nd defendant was simply not a truthful person. He wrote and signed exhibits L, S and T and yet turned around at the trial to deny the indebtedness of the 1^st defendant. 2^nd defendant is not a witness of truth.

COLLATERAL REGISTRATION

One issue that cropped up however at the trial was whether or not the plaintiff had registered the collaterals with the Collateral Registry. The following questions and answers given by the plaintiff’s representative under cross examination on the 25^th February 2015 are very instructive:

“Q: At the time you sold the cars, had you registered it as a charge to this credit facility agreement?

A. My lord, yes.

Q. Where did you register it?

A. We registered it at the Collateral Registry and also per our agreement.

Q. I am putting it to you that you never registered any of these charges at the Collateral Registry?

A. My lord, these charges were duly registered.

Q. You have already told this court that along the line you went to seize two vehicles?

A. My lord, you are right.

Q. You have also told this court that you registered these collaterals?

A. My lord, you are right.

Q. Are you aware that upon registration you will be given a certificate of proof of registration?

A. My lord, you are right.

Q. Do you have a copy here.

A. My lord, no.

Q. Will you be able to provide the court with that proof?

A. My lord, unless I check from the office.”

Exhibits E and F represent the collateral in respect of the vehicles in question created in favour of the plaintiff by the 1^st defendant as security for the repayment of the credit facility advanced to the 1^st defendant. These collaterals were created on the 15^th day of August, 2012 as shown by the exhibits.

Section 25(1) (2) of the Borrowers and Lenders Act, 2008 (Act 773) provides that:

“25. Registration of charges

(1) A borrower or a person interested in a charge shall register a certified copy of a charge or collateral created by the borrower in favour of a lender with the Collateral Registry within twenty-eight days after the date of the creation of the collateral or charge.

(2) Where a charge is created by a company, the requirement to register charges with the Collateral Registry under this section shall be in addition to the requirement under section 107 of the Companies Act, 1963 (Act 179) to register charges with the Registrar of Companies.”

Thus, by the provision of section 25(1) of Act 773 where a charge is created by a borrower in favour of a lender as security for the repayment of the money advanced, the said charge ought to be registered within twenty eight (28) days after the date of the creation of the charge. Exhibits E and F were created on the 15^th August, 2012. Hence, by law, they should have been registered latest by the 12^th September, 2012. The defendants under cross examination denied that the plaintiff has registered the said collaterals. The plaintiff maintains that it had registered the collaterals. In the opinion of the court the burden rest on the plaintiff to prove its assertion. For, sections 14 and 17 of the Evidence Act 1975 (NRCD 323) states that:

“14. Allocation of burden of persuasion

Except as otherwise provided by law, unless it is shifted a party has the burden of persuasion as to each fact the existence or non-existence of which is essential to the claim or defence that party is asserting.

17. Allocation of burden of producing evidence

Except as otherwise provided by law,

(a) The burden of producing evidence of a particular fact is on the party against whom a finding on that fact would be required in the absence of further proof;

(b) The burden of producing evidence of a particular fact is initially on the party with the burden of persuasion as to that fact.”

The court has also explained in the recent case of Okudzeto Ablakwa (No. 2) vs. Attorney General & Another [2012] 2 SCGLR 845 at 867 that

“If a person goes to court to make an allegation, the onus is on him to lead evidence to prove that allegation, unless the allegation is admitted. If he fails to do that, the ruling on that allegation will go against him. Stated more explicitly, a party cannot win a case in court if the case is based on an allegation which he fails to prove or establish. This rule is further buttressed by section 17 (b) which, emphasizes on the party on whom lies the duty to start leading evidence…”

See also Bank of West Africa Ltd vs. Ackun [1963] 1 GLR 176.

The court is of the opinion that proof of the fact that a collateral has been registered is a matter of tendering a copy of the registration certificate in evidence to enable the court verify the fact of registration. Indeed it is an issue of a positive proof as stated in the cases of Majolagbe vs. Larbi [1959] GLR 190; Zabrama vs. Segbedzi [1991] 2 GLR 221.

The court finds that despite its assertion that the said collaterals exhibits E and F have duly been registered and despite assertion by the defendants to the contrary, at least, in cross examination and notwithstanding the opportunity given by the court to the plaintiff to produce the said registration certificates, the plaintiff failed to tender the said registration certificates from the Collateral Registry. What this implies is that there is no evidence on record to show that the plaintiff had registered the said collaterals as required by section 25 of the Borrowers and Lenders Act. Even then, the plaintiff was also enjoined by section 107 of the Companies Act, 1963 (Act 179) to register the said charges with the Registrar of Companies since by exhibits 4 and E and F the said vehicles were the properties of the 1^st defendant – a limited liability company. Here again, the plaintiff failed to show evidence of registration of the charges with the Registrar of Companies. Thus, not only has the plaintiff breached the Borrowers and Lenders Act of 2008 but in addition the failure to register breaches the Companies Act.

The consequence of a failure to register the collateral is as stated by section 25 (3) that

“(3) A charge which is not registered in accordance with subsection (1) is of no effect as security for a borrower’s obligations for repayment of the money secured and the money secured shall immediately become payable despite any provision to the contrary in any contract.”

According to section 107 of the Companies Act

“107. Registration of particulars of charges created by companies

(1) A charge, other than a charge specified in subsection (4), created by a company after the commencement of this Act is void so far as a security on the company’s property is conferred by that charge, unless the particulars prescribed in this section together with the original or a certified copy of the instrument by which the charge is created or evidenced, are delivered in the prescribed form to the Registrar for registration within twenty-eight days after the date of its creation.”

It means therefore that the failure to register nullifies the said collaterals. The Companies Act treats an unregistered charge as void for the purpose of security. Implying that the plaintiff lost the right to regard and treat the said vehicles as collaterals or security for the repayment of the loan it advanced to the 1^st defendant. In Republic vs. James Town Circuit Court Judge; ex parte Annor [1978] 1 GLR 453 at 463 to 464 the court held that

“The combined effect of the said sections 107 and 111 of the Code, is that a duty is mandatorily cast on any company creating a charge to register the charge and that failure to register the charge in compliance with this duty renders the charge void so far as any security on the company’s property is concerned unless any person interested in the charge chooses to register the charge.”

What this implies is that at the date when the plaintiff impounded the vehicles, the said vehicles were not collateral securities for the repayment of the loan advanced to the 1^st defendant and therefore the plaintiff had no right to impound the said vehicles as if they were valid collaterals for the repayment of the loan advanced together with interest thereon. It further implies that on the date when the plaintiff sold the said vehicles it had no right in law to sell them. The plaintiff’s act in this connection was therefore wrongful and unlawful.

As already noted above the 1^st defendant filed a counterclaim wherein it seeks to recover, among others, from the plaintiff:

“a) GH¢1,250.00 per day for unlawful possession and unlawful use of 1st Defendant’s two vehicles mentioned in the claim for 11 months.

b) Return of 1st Defendant’s vehicles/damages for conversion.

The question for determination is whether or not the 1^st defendant should be granted reliefs (a) and of its counterclaim. The court has established that the agreement between the 1^st defendant and the plaintiff, exhibits C, E and F give the plaintiff the right to impound the vehicles and sell them to reduce or pay off the debt of the 1^st defendant in case of default by the 1^st defendant in repaying the credit facility granted it in accordance with the agreement between the parties. It is on the strength of exhibits E and F that the plaintiff acted to seize and dispose of the two vehicles belonging to the 1^st defendant. The only reason why the action of the plaintiff has been found to be wrongful and unlawful is the failure to register the charges as required by the Borrowers and Lenders Act, 2008 (Act 773) and the Companies Act, 1963 (Act 179).

It is however very important and necessary to point out that the duty to register the charges is as much the responsibility of the chargor as it is the responsibility of the chargee. A wrong impression was created by the defendants, during cross examination, as though it was solely the duty of the chargee, that is, the plaintiff herein to register the charges created by the 1^st defendant. However section 25 of the Borrowers and Lenders Act is worth quoting again. It states that

“25. Registration of charges

(1) A borrower or a person interested in a charge shall register a certified copy of a charge or collateral created by the borrower in favour of a lender with the Collateral Registry within twenty-eight days after the date of the creation of the collateral or charge.

(2) Where a charge is created by a company, the requirement to register charges with the Collateral Registry under this section shall be in addition to the requirement under section 107 of the Companies Act, 1963 (Act 179) to register charges with the Registrar of Companies.”

Thus, as stated above, it was the duty of the borrower, in this case the 1^st defendant first and foremost, to register the charge it created over the two vehicles with the Collateral Registry just as it was the duty of the plaintiff to carry out with the registration in the event of failure by the 1^st defendant to register. Hence, the 1^st defendant is as guilty of the breach of Act 773 as the plaintiff.

Again, under the Companies Act, 1963 (Act 179) the primary responsibility for the registration of charges created by companies is on the companies themselves. The relevant section, section 111 is also worth quoting. It states that:

“111. Duty of company to deliver particulars for registration

(1) A company shall send to the Registrar for registration the particulars required to be sent under sections 107 to 110, but registration of the particulars of the charge may be effected on the application of a person interested in the charge.

(2) Where registration is effected on the application of a person other than the company, that person is entitled to recover from the company the amount of the fees payable to the Registrar on the registration.

(3) Where a company defaults in sending to the Registrar the particulars requiring registration as required by this section, then, unless the particulars have been duly delivered for registration by any other person, the company and every officer of the company who is in default is liable to a fine not exceeding [five hundred penalty units].”

As shown above, the failure of a company to send for registration a charge which it has created over the assets or properties of that company is so serious that section 111(3) criminalizes it. It is therefore wrong for the defendants to create the impression that the plaintiff was guilty of non-compliance whilst they the defendants are clean. In the opinion of the court both plaintiff and 1st defendant are guilty of non-compliance. They both breached the law. See Republic vs. James Town Circuit Court Judge; ex parte Annor (supra).

The court will hold that once the 1^st defendant is primarily guilty of the duty to register the charges it created as shown above, the court should not allow it to hide behind the statute and benefit from his own wrong. Equity would not permit a statute to be used as an instrument of fraud or inequitable conduct. See Amuzu vs. Oklikah [1997-98] 1 GLR 89 where the court held at page 109 that:

“The court of equity would go to the extent of tackling this issue much more seriously. It would not permit a statute to be used as an instrument of fraud or inequitable conduct, and would strive hard to interpret the statute in a way as would do justice. Equity would further invoke its wide jurisdiction to grant relief against fraud, even though this meant “decorously disregarding an Act of Parliament”

Again in Maersk (Gh.) Ltd vs. Honesty Fisheries Ltd [1999-2000] 1 GLR 627, it was pointed out that “the principle of law is that no one can found an action on an illegal act or that a party cannot benefit from his own wrongdoing”.

The court is of the view that since the 1^st defendant was also guilty of the breach of Act 773 and 179 as shown above, the 1^st defendant should not be granted the reliefs it seeks in reliefs (a) and (b) of its counterclaim because that will mean the court assisting the 1^st defendant to use the Acts as instrument of fraud on the plaintiff and thereby benefit from its own wrong in failing to register the charges it created by exhibits E and F in favour of the plaintiff.

Further to this, there is ample evidence on record from exhibit K that the proceeds from the sale of the two vehicles by the plaintiff was credited to the account of the 1^st defendant and thereby reducing the 1^st defendant’s indebtedness to the plaintiff. To order therefore a nullification of the sale of the vehicles and subsequently order the return of the vehicles or the payment of their value to the 1^st defendant would imply assisting the 1^st defendant to unjustly enrich itself at the expense of the plaintiff when it had already benefitted from a credit of the proceeds from the sales.

It is also necessary to state that section 25(3) of Act 773 and section 107(3) demands immediate repayment of the money for which the charge was created as security in the event of failure of registration in accordance with the Acts. As pointed out the twenty-eight days expired after 12^th September, 2012. This implies that the 1^st defendant should, in strict compliance with the Acts, have refunded the money they received from the plaintiff by the 13^th September, 2012 but, as found from the evidence, they are still indebted to the plaintiff on account of the credit facility extended to the 1^st defendant. It would therefore amount to a travesty of justice to allow the 1^st defendant keep the money it received from the plaintiff right from the 13^th September, 2012 whiles it insist on a nullification of the sale of the two cars and or payment of compensation to it. For all these reasons the court is firmly of the opinion that the 1^st defendant is not entitled to reliefs (a) and (b) endorsed on its counterclaim.

JUDICIAL SALE

The next issue which the court wants to consider is whether or not the plaintiff is entitled to an order for the judicial sale of the 2^nd and the 3^rd defendant’s properties used as security.

The court wishes to state that to a large measure this issue has indirectly been discussed in the discussion on the use of the two vehicles as collateral. There is evidence on record that the 3^rd defendant assigned his property, parcel number 107 block 7 section 047 situate at North Kaneshie, Accra to the plaintiff as security for the repayment of the loan advanced to the 1^st defendant. A copy of the deed of assignment was received in evidence as exhibit ‘O’. The plaintiff’s representative gave evidence to the effect that the 3^rd defendant also used another immovable property of his, again, as security for the said loan. No document on this second charge was tendered in evidence by the plaintiff. It emerged during cross examination that the 2^nd defendant also used his immovable property, a house situate at Number 12, East Legon Ambassadorial Enclave also as security for this same loan granted to the 1^st defendant. Again document evidencing the said charge created by the 2^nd defendant in favour of the plaintiff was not tendered in evidence. The issue that arose, in respect of the use of these properties as collateral, was whether or not the plaintiff registered these collaterals as required by law. The following questions and answers given during cross examination are very instructive:

Q. The 3rd Defendant’s two houses, did you register them too at the Collateral Registry?

A. My lord, those two properties were duly registered at the Collateral Registry.

Q. You have told this court that the documents covering one of these collaterals you cannot find. Which of these collaterals can’t you find its covering documents?

A. My lord, the one we are looking for is the Parcel No. 41 Block 5, at North Industrial Area.

Q. And that belongs to the 3rd Defendant, right?

A. You are right.

Q. Can you tell us how you were able to register it when you had lost documents covering it?

A. My lord like I said yesterday, the collaterals was duly registered. However, there was a change from the movement from our office. And so this happened after we had changed offices.

Q. Do you have proof that these two houses presented by the 3rd Defendant were registered?

A. My lord, they were duly registered.

Q. I am putting it to you that in the absence of any proof, these collateral were never registered by you so you have no right following them?

A. My lord, the properties were registered with the Collateral Registry.

In the opinion of the court if it is true that the plaintiff registered these securities with the Collateral Registry as required by section 25 of the Borrowers and Lenders Act, 2008, Act 773 then it should not be difficult for the plaintiff to produce proof of the registration in evidence. However, the plaintiff woefully failed to tender even a single document on the alleged registration. As already stated, the responsibility to register charges created is that of the chargor just as the chargee. At any rate it is the duty of the plaintiff who claims to have done the registration to produce the evidence. From the records there is no evidence of any registration of any of the collaterals. The effect is that the said properties can no longer be deemed as securities or collaterals for the loan advanced to the 1^st defendant. Again the law also demands that in such circumstances, the money advanced becomes immediately repayable upon the failure to register as required by law. That being so, the plaintiff cannot maintain its claim against the 2^nd and the 3^rd defendant as far as the enforcement of the said securities are concerned. The plaintiff’s action against the 2^nd and the 3^rd defendant to enforce the securities is therefore dismissed and the claim for the judicial sale of the said properties is dismissed.

An order will therefore be made upon the plaintiff herein to return to the 3^rd defendant forthwith; all the documents and title deeds on the property known as parcel number 107 block 7 section 047 situate at North Kaneshie and covered by Land Title Certificate Number GA.35329 Volume 23, Folio 123. The court will also order the plaintiff to return to the 3^rd defendant herein the documents and title deeds on the 3^rd defendant’s property known as Parcel Number 41 block 5 section 46 situate at North Industrial Area, Accra and covered by Land Title Certificate Number GA. 1881 Volume 42, Folio1.

The court also wishes to place on record that although the plaintiff alleges to have procured a personal guarantee from the 2^nd defendant against the repayment of the credit facility given the 1^st defendant, no claim was endorsed on the writ in that regard by the plaintiff. The court therefore makes no order regarding the said guarantee.

NOTICE

Another issue is whether or not the 3^rd defendant was given notice of the default of the 1^st defendant and also of the instant action. The 3^rd defendant denied being given any notice of the default of the 1^st defendant and also of the plaintiff’s intention to institute the present action. The plaintiff’s representative maintains that the 3^rd defendant was given notice. On the 25^th February 2015, the plaintiff’s representative gave the following answers to questions put to him in respect of the alleged notice:

“Q: The 3rd Defendant as guarantor, did you notify him?

A. My lord, in the letter he was copied.

Q. Was he served?

A. My lord, he was served.

Q. Do you indeed have proof that he was served?

A. My lord, a copy of the letter was given to the 2nd Defendant and he agreed to give it to the 3rd Defendant.

Q. I am putting it to you that the 3rd Defendant had never been served with your so called demand letter?

A. My lord, the 3rd Defendant was copied and was served with the demand letter.

Q. In the manner you have described – you want to change your statement?

A. No, he was served. I am aware that he was served and he had a copy of the demand notice.”

The Credit Facility Agreement, exhibit C, contains no provision on how notices are to be served on the 3^rd defendant. It contains provision on the service of notices on the 1^st defendant but not the 3^rd defendant. It implies therefore that if the 1^st defendant has defaulted in the repayment of the loan and there is the need for any action to be taken by the plaintiff against the 1^st defendant which might affect the 3^rd defendant then it is reasonable to expect that the 3^rd defendant ought to be personally notified. The court does not think that a notification on the 1^st and the 2^nd defendants can be deemed as a valid notification on the 3^rd defendant as the plaintiff would want the court to believe.

Section 32 of Act 773 demands that a notice in writing be given to a defaulting borrower, like the 1^st defendant herein, informing the borrower of the default and requesting him to make good the debt due within thirty days after the notice is served on him. It is after the failure of the borrower to pay within the said thirty days that the lender’s right of enforcement accrues under the Act. A combine reading of section 32 and 33 of the Act will reveal that it is not only the borrower who is entitled to be given the said notice for thirty days, but that any person who has provided security for the repayment of the loan is equally entitled to be given notice. It seems however that under the said Act, it is most important that the realization of the security is done on notice to the chargor and in this wise the court does not think that the plaintiff flouted any rule since the 2^nd and the 3^rd defendants who both secured the loan with their properties are cited as parties to the instant suit.

COUNTERCLAIM

The 1^st defendant has also counterclaim for GH₵500,000 general damages for trespass and unlawful occupation of the 2^nd defendant’s house. Without considering the merits of this claim, the court is of the view that the counterclaim, as it stands, is unmaintainable by the 1^st defendant. This is so because the 1^st and the 2^nd defendant are both independent entities; the 1^st defendant being a legal entity and the 2^nd defendant a natural person. A cause of action does not accrue to the 1^st defendant in respect of torts, allegedly, committed against the 2^nd defendant. Hence, in the opinion of the court if it is true that trespass has been committed in the house of the 2^nd defendant by officers or agents of the plaintiff or that the said house had been unlawfully occupied by officers or agents of the plaintiff nothing stops the 2^nd defendant from claiming, in his own right, for damages. The 1^st defendant- Sky Consult Ghana Limited has no capacity or right to claim for damages, either for itself or on behalf of the 2^nd defendant, for tortious acts, allegedly, committed against the 2^nd defendant. . A counterclaim is an action and it is now settled law that a person who has no capacity cannot maintain an action. See Sarkodee I vs. Boateng II [1982-1983] GLR 715; Duah vs. Yorkwa [1993-1994] 1 GLR 217. On this ground alone the claim for damages by the 1^st defendant is dismissed.

The 1^st defendant also counterclaims for a rescission of the agreement for illegality. However the court finds no evidence of illegality about the contract on record. Indeed there is nothing illegal about the contract. This claim is therefore dismissed.

CAPACITY

The defendants have also challenged the capacity of the plaintiff. The plaintiff had, in paragraph 1 of its statement of claim pleaded that:

1. Plaintiff is a non-banking financial institution authorised by the Bank of Ghana to extend credit lines on short-term basis with its principal place of business at House Number 7, Dr. Tagoe Road, Djanie Ashie Avenue, East Legon, Accra.

The defendants have also in response denied this allegation made by the plaintiff. The law therefore demands that the plaintiff leads cogent evidence to prove this allegation. See Sarkodee I vs. Boateng (supra).

The court finds from exhibit W that the plaintiff company was incorporated on the 20^th January 2009. The again the court finds from exhibit W1 that the plaintiff company was issued with a certificate to commence business on the 21^st January 2009. The court finds from exhibit W2 that the nature of business which the plaintiff is authorized to carry out includes credit and finance advice, trade financing and project financing. From the evidence on record, the court holds that the plaintiff is duly incorporated in accordance with the law and it therefore has capacity to sue the defendants.

There is evidence on record that in June 2010, the plaintiff applied, per exhibit X to the Bank of Ghana for licence to enable the plaintiff regularize their operation as a non-bank financial institution. There is evidence on record that the Bank of Ghana allowed the plaintiff to continue to operate whilst the Bank was processing the plaintiff’s application for licence. The court finds from exhibit Q that the plaintiff was given licence to carry on the business of finance house as from the 18th December, 2014. The 1^st and the 2^nd defendants have conceded in their addresses filed on the 29^th January 2016 that the fact that the plaintiff had no licence to operate at the time the loan was advanced to the 1^st defendant does not render the credit agreement null and void. The 3^rd defendant holds the view that in the absence of a licence, the contract was illegal.

It must be placed on record that the plaintiff’s operations was governed by the Non-Bank Financial Institution Act, 2008, Act 774. Indeed section 2 forbids the operation of the business of money lending except one is licensed so to do. By section 5 (2) of Act 774 the Bank of Ghana is enjoined to either issue or inform an applicant of its refusal to issue a licence within ninety days after an application is submitted for a licence. In the instant matter, the application for a licence was made in June 2010 but the Bank of Ghana did not issue the licence until December, 2014. It is on record that the loan was given out to the 1^st defendant in August, 2012. Clearly the plaintiff did not have the licence from the Bank of Ghana to operate at the time it agreed to make the credit facility available to the 1^st defendant in August, 2012. The court holds that there is nothing in Act 774 which renders the agreement between the plaintiff and the defendant illegal or void for the want of licence by the plaintiff at the time the loan was advanced to the 1^st defendant. The evidence on record clearly shows that the Bank of Ghana tacitly endorsed the operation of the plaintiff company at the time the loan was given to the 1^st defendant and it can therefore not be argued that the agreement was illegal and therefore the plaintiff cannot sue to recover the loan.

In conclusion the court will dismiss the counterclaim filed by the 1^st defendant. The court however enters judgment for the 3^rd defendant as stated hereinbefore and for that matter relief (e) endorsed on the plaintiff’s writ of summons is dismissed. Judgment is entered in favour of the plaintiff against the 1^st defendant to recover cash the sum of GH₵207,306.66. The plaintiff shall also recover interest on the said sum at the rate of 6.5% per month from March 10^th, 2014 till the date of final payment.