IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
KUMASI - A.D 2018
MULTI CREDIT SAVING & LOAN - (Plaintiff)
VERSION APRICOT & ANOR - (Defendants)
DATE: 29 TH MAY, 2018
SUIT NO: BFS/45/17
JUDGES: ANGELINA MENSAH-HOMIAH (MRS.) JUSTICE OF THE HIGH COURT
FRANK LISTOWEL DEBRAH YEBOAH FOR PLAINTIFF
FRANCIS KOFFIE FOR 1ST DEFENDANT
The Plaintiff herein commenced an action against the Defendants herein on 27/04/2017 wherein it claimed the reliefs as set out below:
a) An order for the recovery of the sum of GHC 495,611.80 being the principal outstanding of GHC 472,011.24 and interest including penalty of GHC 23,600.56 owing and due as at March 2017 on the loan and overdraft granted by the Plaintiff in May, 2012 and February, 2015 to the 1st Defendant and guaranteed by the 2nd and 3rd Defendants which the Defendants have failed and/or refused to pay notwithstanding repeated demands on them by the Plaintiff.
b) Contractual interest including penalty interest on the said sum from 1/4/17 to date of judgment and thereafter at prevailing commercial bank interest rate till date of final payment.
c) Costs, including solicitor’s fees.
d) Any further order(s) or other relief(s) that the court may seem fit to make.
The 1st Defendant entered appearance through its lawyer, Francis Koffie, Esq on 10/05/17 and proceeded to file a defence on 01/06/17. The matter was partially settled at pre-trial, and the sole issue which has been placed before this court for trial is:
1. Whether or not the Plaintiff is entitled to interest and penalty.
On 30/04/2018 when the matter was placed before the trial court, the court directed that the issue will be disposed of by legal arguments. Hence, an order was made for counsel to file their legal arguments simultaneously on or before 18/05/2018. Counsel for the Plaintiff was further directed to take steps for the court notes of the day and a hearing notice to be served on counsel for the 1st Defendant. An affidavit of service filed by P.G. Danquah, a bailiff, attached to the Commercial Court, Kumasi, sworn on 08/05/2018 indicates that the court order dated 30/04/2018, and a hearing notice were duly served on Francis Koffie, Esq, through his clerk, Maxwell. From the court’s records, counsel for the Plaintiff filed his submissions on 22/05/2018 but as of the time of writing this judgment, counsel for the 1st Defendant had not filed his submissions, he is therefore deemed to have waived his right to be heard.
For the Plaintiff, counsel submitted that the bank is entitled to interest and penalty on the sum claimed from 01/04/17 to the date of judgment, and thereafter at the prevailing commercial bank interest rate till date of final payment. He supported his position with case law and Legislation: (i) Holland West Africa & Anor v. Pan African Trading Co. & Anor (1976) 2 GLR 179-184; (ii) Akoto v. Gyamfi-Addo & Anor (2005-2006) SCGLR 1018; (iii) The Court (Award of Interest and Post Judgment Interest) Rules 2005 C.I. 52 and (iv) Ghana Port & Harbours Authority v. Nova Complex Limited (2010) SCGLR 1 at 10-11 per Dr. Date-Bah, JSC, and these have been reviewed.
Simply put, the basis for the award of interest as demonstrated in a plethora of cases, including those cited above, is that a party has been deprived of the use of his or her money for a relevant period, and must therefore be compensated for that loss. As rightly argued by counsel for the Plaintiff, the award of interest is governed either by statute law, or by agreement between the parties. The applicable statute is C.I. 52, which also gives the court a discretion to award interest when there is no agreement to that effect.
In the Holland West Africa v Pan African Trading Company case referred to above, for example, the court held inter alia (holdings 3 and 4), that:
(3) If a breach of contract by a Defendant had deprived a plaintiff of the use of a sum of money or other capital asset, the Defendant must be presumed to have agreed to pay interest for the period between the date when the cause of action arose and the date of the judgment…
(4) Where a statute gave power to the court to award interest, a Plaintiff need not claim it in his pleadings for in such a case the court could award interest without any claim being made in the pleadings. But where the interest was claimed as a result of an agreement express or implied, then the claim must be made in the writ or pleadings.
This principle for the award of interest was neatly set out in the Akoto v. Gyamfi –Addo case referred to supra, (holding 1) thus:
The general principle for the award of interest to a party was that such party had been unjustifiably kept out of money due to him or her for the relevant period…
Apart from the case law, the Rules (1) and (2) of C.I. 52 also provide for the award of interest and post judgment interest as follows:
Rule I-Order for payment of interest.
1. If the court in a civil cause or matter decides to make an order for the payment of interest on a sum of money due to a party in the action, that interest shall be calculated
(a) at the bank rate prevailing at the time the order is made, and
(b) at simple interest
but where an enactment, instrument or agreement between the parties specifies a rate of interest which is to be calculated in a particular manner the court shall award that rate of interest calculated in that manner.
Rule 2-Post Judgment interest
2.(1) Subject to sub-rule (2) each judgment debt shall bear interest at the statutory interest rate from the date of delivery of the judgment up to the date of final payment.
(2) Where the transaction which results in the judgment debt is
(a) contained in an instrument,
(b) evidenced in writing, or
(c) admitted by the parties
and the parties specify in the instrument, writing or admission the rate of interest which is chargeable on the debt and which is to run to the date of final payment, then that rate of interest shall be payable until the final payment.
Rule 1(1) of C.I. 52 gives the Court the discretion to award interest in appropriate cases. In exercise of that discretion, the interest rate exigible is the prevailing bank rate and at simple interest, which is defined in Rule 4 as:
Rule 4-Interpretation of statutory rate
4. (1) In these Rules statutory rate of interest is the bank rate prevailing at the time the judgement or order is made by the court.
(2) Where there is doubt as to the prevailing bank rate, the 91 days Treasury Bill rate as determined by the Bank of Ghana shall be the prevailing bank rate.
But then, under Rule 1(2) (b) referred to. Supra, if there is an agreement on interest between the parties, the court is enjoined to apply that rate of interest up to the date of delivery of judgment. Rule 2 of C.I. 52 is clear and does not need any interpretation, that is, post judgment interest automatically applies to every judgment debt regularly obtained. The parties can however come to an agreement for the same to be waived or varied. On the basis of the foregoing, this court will uphold the submissions of counsel for the Plaintiff that the Plaintiff is entitled to interest and post judgment interest on the judgment debt of GHC 477,011.24.
The facts of this case even make the Plaintiff’s demand for interest more justifiable. In his statement of defence, the 1st Defendant admitted paragraphs 1 to 11 of the Plaintiff’s statement of claim. With regards to the issue under consideration, paragraphs 6 and 7 of the statement of claim, which have been admitted by the defendant are relevant. They read:
6. Plaintiff says that sometime in May, 2012 the 1st Defendant applied for a loan facility of an amount of GHC 150,000.00, and the Plaintiff advanced same to it at an interest rate of 3.5% per month for one year and an overdraft facility in the sum of GHC 180,000.00 at an interest rate of 2.5% per month for one year on February, 2015, subject to the terms and conditions thereon.
7. The Plaintiff says further that the said facility, in addition to the aforesaid interest, attracted default penalty interest of 5% a month on the outstanding balance after expiry of the facility and the Plaintiff shall recall the facility in full plus interest and enforce securities to recover same in event of default.
The law is that a party need not prove any averment which has been admitted by his opponent. In other words, the party in whose favour the admission is made is relieved from proving the admitted matter. This is because that fact will no longer be in contention. See Fori v. Ayirebi (1966) GLR 627 (holding 6) where the court held that when a party had made an averment and that averment was not denied, no issue was joined and no evidence need be led on that averment.
Also, in Asante v. Bogyabi & Ors, (1966), G.L.R. 232, Siriboe JSC, at 240 stated 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.
Having expressly admitted that the agreement between the parties attracted interest and penalty interest at agreed rates, it does not lie in the mouth of the 1st Defendant herein to say that the Plaintiff is not entitled to interest on the judgment debt. The 1st Defendant may have suffered some business mishap, but that does not in any way affect its obligations to pay interest under the loan agreement between the parties. This court concludes that the Plaintiff is entitled to interest on the judgment debt.
However, the court finds that the interest rate of 3.5% per month and default interest rate of 5% per month is unrealistic, excessive and unconscionable. For instance, the 5% interest per month translates into 60% per annum, the 3.5% per month also translates into 42% per annum. With such outrageous interest rates, it is not in the least surprising that there has been a default in repayment. In order to do substantial justice, the court will order that the Plaintiff be paid interest on the judgment debt at the prevailing commercial bank lending rate and at simple interest from 01/04/2017 up to the date of the consent judgment; and post judgment interest at the same rate and at simple interest up to the date of final payment. No order as to cost.