Royal Beneficiaries Association v. Esther Okailey Asare & ORS
2015
COURT OF APPEAL
GHANA
CORAM
- OWUSU M., J.A. (PRESIDING)
- GYAESAYOR, J.A.
- SOWAH, J.A.
Areas of Law
- Contract Law
- Commercial Law
- Equity and Trusts
- Banking and Finance Law
2015
COURT OF APPEAL
GHANA
CORAM
AI Generated Summary
The plaintiff, a guarantee company, sued the defendants for failing to repay a loan. The defendants argued the loan was illegal under the Moneylenders Act 1941, and the trial court agreed, declaring the transaction void due to the plaintiff's unlicensed money lending and fraudulent inducement. On appeal, the appellate court upheld the illegality ruling but decided the transaction should be reopened to avoid unjust enrichment, ordering the remaining principal to be repaid with interest.
SOWAH, J. A:
The plaintiff/appellant is a company limited by guarantee and purported to be a Welfare Association whose functions included borrowing from the commercial banks for the benefit of its members.
It sued the defendants/respondents for failing to repay financial assistance in accordance with agreed terms. The 1st defendant admitted receiving money from the plaintiff but she and the other defendants who had stood as guarantors filed a counterclaim resisting plaintiff's claim and urging the trial court to find the loan transaction illegal and unenforceable in terms of the Moneylenders Act 1941, Cap 176.
They further urged the court to find the interest and charges on the facility harsh, excessive and unconscionable and to reopen the transaction under the Loans Recovery Act Cap 175. [See pages 149-150 of Record]. Thus one of the issues for trial was whether or not the transaction between the parties was illegal and unenforceable under the provisions of Cap 176 and ought therefore to be set aside as void, or it was a lawful transaction which the court ought to enforce.
In the judgment dated 2nd December 2008 to be found at pages 188-209 of the Record, the trial court found on the facts and the evidence that the plaintiff was engaged in the active business of money lending by definition of section 1 of Cap 176 and held the transaction to be an illegal contract as it was prohibited by law to conduct the business of money lending without a license.
On this premise the contract exhibit D was declared void and unenforceable.
The 1st defendant had prayed for the reopening of the loan transaction in accordance with section 3(1) of Cap 175 but the trial judge disagreed that this law was applicable to the circumstances of the case.
She therefore refused to reopen the transaction for the purpose of granting any relief there under.
The trial court also held the transaction to be unenforceable on two other grounds: It agreed with the 1st defendants complaint of fraudulent inducement through misrepresentations.
It also held that as the plaintiff had been set up as a guarantee company, by section 10 of the Companies Act 1963, Act 179 it ought not to have conducted business for the purpose of making profits.
Dissatisfied with the judgment, the plaintiff/appellant filed her Notice of Appeal on 9th Dec 2008, praying that the whole judgment be overturned, the agreement between the parties be enforced, and the reliefs sought in the lower court be restored an