HERITAGE & LEGACY MICROCREDIT VRS OKOH & ANOTHER (H1/219/2021) [2022] GHACA 111 (2 June 2022)

IN THE SUPERIOR COURT OF JUDICATURE IN THE COURT OF APPEAL (CIVIL DIVISION) ACCRA – GHANA CORAM: HENRY A. KWOFIE JA PRESIDING P. BRIGHT MENSAH JA GEORGE KOOMSON JA BETWEEN: HERITAGE & LEGACY MICROCREDIT CO. LTD FELIX OKOH & ANR … vs … SUIT NO. H1/219/2021 2ND JUNE 2022 PLAINTIFF/RESPONDENT DEFENDANTS/APPELLANTS ========================================================= JUDGMENT BRIGHT MENSAH JA: My Lords, the instant appeal is an invitation to us to determine whether the non- compliance by the plaintiff/respondent of Order 59 of the High Court [Civil Procedure] Rules, 2004 [CI 47] the defendants/appellants complained of, renders the suit incurably bad and subject to be dismissed or for disclosing no cause of action, the statement of claim be struck out. The appeal is against the Ruling of the High Court, Accra [Commercial Division 3] delivered 19/02/2021 in respect of an application by the defendants/respondents praying for an order striking out plaintiff/ respondent’s pleadings “for disclosing no reasonable cause of action” or striking out the writ of summons. In a terse Ruling by the lower court, the learned trial judge had held: “By court: On 11th November 2020, the defendants/applicants filed motion on notice for an order striking out plaintiff’s pleadings for disclosing no reasonable cause of action pursuant to Order 11 rule 18, Order 59 of CI 47 and under the inherent jurisdiction of the court or an order setting aside the writ of summons together with the statement of claim for non- non-compliance with the Rules of Court [Order 81 rule 2(1); Order 59 rule (3) of CI 47. I ordered parties to file their written submissions which was complied with by both parties and accordingly fixed 12th February 2021 for the Ruling. However, when I went through the affidavit evidence and the written submissions of both parties, I realized that the motion filed by the defendants/applicants was confusing so I asked the applicants to elect which of the applications they would like the court to give its Ruling on and the defendants/applicants asked for a week to make that determination. Today, Counsel for the defendants/applicants inform the court to deliver its ruling based on the application they have filed. Having read the affidavit in support and in opposition to the application and written submission filed by the parties, the court is of the opinion that the application filed by the defendants/applicants is both misleading and confusing especially when the alternative options would lead to different consequential orders being given. In the circumstance, the application filed by the defendants/applicants is hereby dismissed….” See: pp 249-250 of the record of appeal [roa] The defendants/appellants have launched their attack against the Ruling of the lower court on a umber of grounds contained in a notice of appeal stated hereunder: 1. The Ruling is against the weight of the evidence on record. 2. Additional grounds of appeal shall be filed once the defendants/ appellants obtain certified copy of the said Ruling of the High Court. See: pp 251-252 [roa] Pursuant to leave of this court of 06/12/2021, the defendants/appellants filed the following additional grounds of appeal: 1. The learned trial judge erred in holding that the application was misleading by reason of the alternative reliefs being sought. 2. The learned trial judge erred in failing to consider the reliefs being sought disjunctively. 3. The learned trial judge erred in not making a determination as to whether the plaintiff/respondent’s statement of claim complied with the requirement of Order 59 of the High Court [Civil Procedure] Rules, 2004 [CI 47]. 4. The learned trial judge erred when she failed to consider the con- sequence of the plaintiff/respondent’s non-compliance with the mandatory provisions of Order 59 of the High Court [Civil Procedure] Rules, 2004 [CI 47]. In this appeal, the parties shall continue to maintain their designations as the plaintiff and defendants respectively. In determining this appeal, I intend to combine all the grounds of appeal and address them together since they seek to address the fundamental issue as to whether the plaintiff’s statement of claim discloses any reasonable claim and to that extent, whether the learned trial judge erred in law when she dismissed the defendant’s application, claiming that the application put before her was misleading and confusing. Practice & Procedure of Order 11 r 18: To begin with, the law on the practice and procedure of Order 11 r 18(1) of the High Court [Civil Procedure] Rules, CI 47 may be summarized as follows: i) That the judge’s discretion to grant such application ought to be exercised sparingly and only in obvious cases; ii) the discretion should be exercised judicially; iii) when the facts were in dispute and may call for extrinsic evidence to prove them the rule will not apply and the application should be refused; iv) the application should not be granted if its determination involved serious investigations of questions of general importance; and v) therefore, the jurisdiction of the court must be exercised with extreme caution. It must be emphasized that the application to strike out the plaintiff’s pleadings was anchored on Order 11 r 18(1) of the High Court [Civil Procedure] Rules, CI 47 that provided: “(1)The court may at any stage of the proceedings order any pleading or anything in any pleading to be struck out on the grounds that (a) It discloses no reasonable cause of action or defence; or (b) It is scandalous, frivolous or vexatious; or (c) It may prejudice, embarrass, or delay the fair trial of the action; or (d) It is otherwise an abuse of the process of the court, and may order the action to be stayed or dismissed or judgment to be entered accordingly. (2) No evidence whatsoever shall be admissible on an application under subrule (1)(a).” It is peculiarly important to reiterate that similar provision was made under the old rules, that is to say, Order 25 r 4 of LN 140A. Significantly, Order 25 r 4 of LN 140A is in pari material with the current rule, Order 11 r 18(1) of CI 47. I do observe that although the wording has changed with some slight modifications, the substance running through both provisions remains unaltered. As a rule of construction, therefore, since both the old provision and the current provision are virtually the same, the same meaning should be given to both. See: Adam v Nuamah - Civ. App. No. J4/68/2019 SC (unreported) delivered 05/02/2020. The Halsbury’s Laws of England Vol. 37 of the 4th ed at p. 318 provides some form of assistance to the court exercising such a judicial discretion to strike out pleadings or dismiss an action on grounds that it is either frivolous or vexatious or discloses no reasonable cause of action or it is otherwise an abuse of the legal process. The learned authors have provided in para. 430 @ p.318 of the Halsbury’s Laws as follows: “……………………. the powers are permissive, not mandatory, and they confer a jurisdiction which the court will exercise in the light of all circumstances concerning the offending pleading. The discretion is exercised by applying two fundamental, although complimentary principles. The first principle is that the parties will not lightly ‘be driven from the seat of judgment’, and for this reason the court will exercise its discretionary power with the greatest care and circumspection and only in the clearest of cases. The second principle is that a stay or even dismissal of proceedings may ‘often be required by the very essence of justice to be done’ so as to prevent parties being harassed and put to expense by frivolous, vexatious or hopeless litigation.” [emphasis ours] In Lartey & Lartey v Beany [1987-88] 1 GLR 590 the most respected and distinguished jurist, Cecilia Koranteng-Addow J had the opportunity to consider an application under Order 25 r 4 of the High Court [Civil Procedure] Rules, 1954 LN I40A. Having reviewed the various authorities on the subject, the learned judge postulated that an application to dismiss an action would not be granted if it involved serious investigations of questions of general importance. The same principle has earlier on been echoed in Bank of West Africa Ltd v Holdbrook [1966] GLR 164. It bears emphasis that in Morrison & anr v Victory Bible Church [2015-2016] 2 SCGLR 1628, the High Court on 10/03/2010, summarily dismissed the plaintiffs’ claim as being frivolous and an abuse of the process of the court in an application brought under Order 11 r 18(1) of CI 47. The plaintiffs appealed to the Court of Appeal and the 1st appellate court reversed the decision of the trial High Court. It allowed the appeal and ordered the full retrial of the case. However, the 1st defendant appealed to the Supreme Court against the judgment of the Court of Appeal. The Supreme Court in a 4-1 majority decision dismissing the appeal, held that the court has power to strike out pleadings under Order 11 r 18(1) of CI 47 or under its inherent jurisdiction. Significantly, the Supreme Court in coming to the conclusion it did, adopted with approval, the statement of law the Court of Appeal expounded at pp 1633-1634 of the Law Report that is worthy of reproduction here: “………………..[W]hat is the proper approach? The trial judge dismissed the suit because he was of the view that the action was frivolous and constitutes an abuse of the court’s process. Indeed, under Order 11 r 18 of CI 47, which has been invoked, the trial judge in the exercise of his discretionary power is permitted to dismiss summarily an action which he considers frivolous or which constitutes an abuse of the court’s process. But before coming to this conclusion, the trial judge as enjoined to consider whether the case before him is one fit and proper to be so decided summarily. The issue to be decided in this appeal therefore is whether or not on the available evidence, the trial judge, procedurally is justified in deciding the case summarily…….” This court [Coram: Azu Crabbe CJ, Sowah and Anin JJA] has held in Ghana Muslims Representative Council v Salifu [1975] 2 GLR 246 that it was a matter within the judicial discretion of a judge whether or not, to strike out pleadings on the ground that the pleadings disclosed no reasonable cause of action or defence or that the action had no reasonable chance of success. Nevertheless, the court further stated: “The jurisdiction of the court must, however, be exercised with extreme caution. A pleading would only be struck out where it was apparent that even if the facts were proved the plaintiff was not entitled to the relief he sought..……” [emphasis added] In the English case of Attorney-General of the Duchy of Lancaster v London & North Western Rly Co. [1892] 3 Ch. 274 @ 277 C/A Lindley L. J posited: “……….[I]t appears to me that the object of the rule [Order 25 r 4] is to stop cases which ought to be launched ------- cases which are obviously frivolous or vexatious, or obviously un- sustainable……………………………………………………….” Learned Counsel for the plaintiff has equally referred this court to the decision of the Supreme Court in Netas Properties & Investment, Emmanuel Adolf Tagoe v Lands Commission, Civ. App. No. J4/14/2014 which decision held that the jurisdiction to strike out pleadings should be sparingly exercised with extreme cause and circumspection in plain and obvious cases. So, the rule applies only in obvious cases and not where the application calls for extrinsic evidence before the court can come to a conclusion or the other. It must be noted at the very outset of this discourse that an application under Order 11 r 18(1)(a) of CI 47 does not admit an affidavit evidence. The court is only obliged to look at the pleadings and make a determination as to whether or not the plaintiff’s pleadings disclose any reasonable cause of action. However, that rule is not cast in stone or is inflexible. The authorities are to the effect that the application may also be brought under the inherent jurisdiction of the court. See: Morrison & anr v Victory Bible Church [2015- 2016] 2 SCGLR 1628. Thus, where the applicant moves the court under its inherent jurisdiction it is permissible to resort to affidavit evidence. In the instant case, the defendants applied in the alternative, that is to say either under Order 11 r 18 or under the court’s inherent jurisdiction. In consequence, I hold the respectful view that the application was properly laid before the lower court. By no stretch of imagination, therefore, could it be said the application was confusing and misleading as the learned trial judge held. Arguments of Counsel for the defendants: It has been submitted on behalf of the defendants in the instant appeal that the plaintiff’s suit is not just an action for recovery of money but a moneylender’s action or mortgage action or both. Such actions by law have their own special rules and procedures provided for by Order 59 of CI 47 that requires a strict compliance by a plaintiff seeking to commence a suit, Counsel for the defendants insisted. It bears emphasis that by Order 59 r 1(2) of CI 47, mortgage action is an action in which there is a claim by the plaintiff for any of the following reliefs: a) payment of moneys secured by the mortgage or charge; b) sale of the mortgaged property; c) appointment of a receiver; d) delivery of possession to the mortgagee or person entitled to the charge by the mortgagor or person having the property subject to the charge or by any other person who is or is alleged to be in possession of the property; e) release of the property from the security; f) delivery of possession by the mortgagee. Per the rules, a money lender’s action means an action for the recovery of money lent by a money lender or for the enforcement of any agreement or security relating to money lent, which is an action brought by the lender or an assignee. The rules provide that before a writ beginning a money lender’s action is issued, it shall be endorsed with a statement that at the time of the making of the loan or contract or the giving of the security in question the lender was licensed as a money lender under the Money Lender’s Ordinance, 1940 [Cap. 176]. See: Order 59 r 2 of CI 47. It is also provided in Order 59 r 3 of CI 47 that every statement of claim in a money lender’s claim or mortgaged action shall state, a) the date on which the loan was made; b) the amount actually lent to the borrower; c) the rate percent per annum of interest charged; d) The date when the contract for payment was made; e) The fact that a note or memorandum of contract was made and was signed by the borrower; f) The date when a copy of the note or memorandum of the contract was made and was signed by the borrower; g) The date when a copy of the note or memorandum was delivered or sent to the borrower; h) The amount repaid; i) The amount due but unpaid; j) The date upon which the unpaid sum became due; k) The amount of interest accrued due and unpaid on the sum. It is instructive, the plaintiff pleaded in paragraph 1 of the statement of claim that it is a limited liability company licensed to engage in the business of financial services including money lending. It was on this basis the defendants contend and defence lawyer has forcefully submitted that the present action comes within the category of cases envisaged by Order 59 of CI 47. Is that really the case? The plaintiff in suing the defendants jointly and severally, endorsed its writ of summons that initiated the suit on 26/06/2020, as follows: 1. Recovery of the sum of Ghc85,664,002.36 from the defendants being the balance outstanding on the loan facility and interest thereon. 2. Interest on relief ‘a’ above at the rate of 8% per month from the 1st day of July 2020 until the date of judgment. 3. Damages for breach of contract. 4. Costs. 5. Legal fees. 6. An order for judicial sale of the properties used as collateral for the loan or security for repayment of the facilities including • residential property of Regimanuel Gray stated in the Statement of Claim; landed property on the Spintex Road; landed properties whose documents were submitted to • • plaintiff. 7. Any other reliefs this honourable court may deem fit. Accompanying the writ of summons was a statement of claim that set out in detail, the claim. It was pleaded in paragraph 4 of the statement of claim that between the period 13th April 2015 and 2nd December 2015 the defendants applied for and received various amounts of money as loans from the plaintiff. It was further pleaded that the 1st defendant on his own behalf and that of the 2nd defendant used the proceeds of a contract to be executed by the 2nd defendant as security for the loan. The parties then agreed to consolidate the various loans disbursed to the defendants. It was specifically pleaded in paragraphs 7 - 10 as follows: “7. Plaintiff says that per the said agreement dated on or about 8th day of April 2016, the defendants had accessed a loan of Ghc2,123,529.00 from plaintiff subject to terms. 8. Plaintiff states that the loan was given to the defendants at The rate of 8% per month even though the original interest Rate was 9%. 9. Plaintiff states further that the defendants agreed to pay back The loan together with the interest thereon within a period of Six months ie from 8th April 2016 to 8th October 2016. 10. Plaintiff avers that the 1st defendant offered his residential property No.5, Merces Crescent, Regimanuel Estate, East Airport, Accra as additional collateral for the for the repayment of the loan together with the interest agreed.” It was further pleaded that the defendants have woefully failed to honour their obligations under the loan agreement although the loan repayment period had since elapsed. See: pp 4 – 5 [roa] Arguments of Counsel for the plaintiff: Learned Counsel for the plaintiff has also submitted quite strongly that the instant suit does not fall into the category of incontestably bad causes but a formidable case based on the facts and the pleadings the plaintiff filed. It was a loan agreement or transaction that spelt out the conditions, provisions and terms that raised liabilities and causes of action against the defendants in default of the loan terms, Counsel maintained. He submitted further that Order 11 r 18 did require pleading to be particularly specific or detailed in its terms. The requirement or condition of the law on the subject of reasonable cause of action is for the pleading complained of to raise a sufficient description of the liability in law or material fact against the defendant to enable him offer a defence to that pleading or liability or relief. Thus, the plaintiff in his pleadings need not catalogue every detail of the liability, Counsel added. Resolution of the appeal: We have critically evaluated the affidavit evidence vis-à-vis the impugned statement of claim and we are of the respectful opinion that this case is purely a commercial claim and to be specific, banking transaction contracted between the parties capable of being litigated upon under Order 58 of CI 47. A commercial claim as provided for under rule 2, Order 58 is any claim arising out of trade or business transaction that is not less than twenty-five thousand Ghana cedis in monetary value or the subject of which has a monetary value of not less than twenty-five thousand Ghana cedis and includes any claim relating to --- • • • the formation or governance of a business or commercial organization; the winding up or bankruptcy of a business organization or corporate person; the restructuring of a payment or commercial debt by or to a business or commercial organization or corporate person; • a business document or contract; • • • the export or import of goods; the carriage of goods by sea, air, land or pipeline; the exploration of oil and gas reserves; • insurance and reinsurance; • banking and financial services; • a business agency; • disputes involving commercial arbitration and other settlement awards; • • intellectual property rights, including patent, copyright and trademarks; tax matters; • commercial fraud; • application under the Companies Act, 1963 (Act 179); and • any other claim of a commercial nature. [emphasis highlighted] In the instance case, a cursory examination of paragraph 1 of the plaintiff’s pleadings specifies the nature of business it does. It is licensed to engage in providing financial services. Providing financial services includes advancing loans to entities and individuals that may patronize its services. Thus, the case comes falls within the category of cases under Order 58 of CI 47. We therefore uphold the submissions of Counsel for the plaintiff, having regard to the nature of the claim a formidable case based on the facts and the pleadings. Critically, the transaction between the parties was a loan agreement that spelt out the conditions, provisions and terms that raised liabilities and causes of action against the defendants in default of the loan terms. That did not require an elaborate description under the Moneylenders Ordinance, 1940 (Cap. 176) and Order 59 of CI 47. We need to add that there is that lack of evidence on record to show that the plaintiff is a certified ‘money lender’ typical of which the suit shall come into of cases contemplated by the Moneylenders Ordinance, 1940 (Cap. 176) and Order 59 of CI 47. That leads us to addressing the second leg of the appeal. The chief question we are called upon to answer in the instant appeal is whether the learned trial judge adopted the proper approach in dismissing the application the defendants put before her. The application before the lower court that has culminated in the instant appeal and generated this hot debate can be found on pp 25-28 [roa]. It was: “Motion on notice for an order striking out plaintiff’s pleadings for disclosing no reasonable cause of action pursuant to Order 11 r 18; Order 59 of CI 47 and under the Inherent jurisdiction of the Court Or An order setting aside the writ of summons together with the Statement of claim for non-compliance with the rules of court Order 81 r 2(1); Order 59 r 3 of CI 47. The grounds upon which the application was made was sufficiently set out in the motion paper itself as well as the supporting affidavit. So, it was plainly obvious that the application was in the alternative. Therefore, in exercising its judicial discretion in the matter and the lower court having ordered the parties to file their respective written submissions, it should have proceeded to deal with the matter in terms of either the 1st leg of the application or the next, albeit under the rules of the court or under the court’s inherent jurisdiction. To say that the Ruling of the High Court was an abdication of the learned trial judge’s duty to decide the application on the merit is an understatement. What she sought to do was alien to doing justice in the matter. The learned trial judge was required by the application to either uphold it if she found merit in it or otherwise dismiss it, given the affidavit evidence put before her and resorting to the plaintiff’s statement of claim as well. The motion was never in doubt as to which prayer the defendants were seeking. It was simply to strike out the statement of claim for disclosing no reasonable cause of action simpliciter and or to strike out the writ. There was nothing misleading or confusing about the application. It cannot be over-emphasized that under Order 11 r 18 of CI 47 the court had the power to strike out pleading or averment therein at any stage of the proceedings and may order the action either to be stayed or dismissed and or the court may enter judgment. That was the simple duty that the learned trial judge in our present suit was called upon to do. She however abdicated that judicial duty and regrettably dismissed the application not based on law and or binding judicial principles and precedents. At the risk of sounding repetitive, we have critically evaluated the affidavit evidence on record as well as the pleadings contained in the plaintiff’s statement of claim, the ruling of the lower vis-à-vis the written submissions filed in the appeal by both lawyers on each side. Our conclusion is that the learned trial judge certainly did not adopt the best practice or the appropriate approach to the application. In consequence, she fell into a serious error of law when the learned trial judge summarily dismissed the application instead of giving critical consideration to the application. Now, having regard to the finding of this court that the plaintiff’s claim is a purely commercial transaction that did not come into the cases contemplated by the Moneylenders Ordinance, 1940 (Cap. 176) and Order 59 of CI 47, the statement of claim does not have to conform to statutory provisions of NRCD 96 and mandatory provisions of Order 59 of CI 47. The statement of claim sufficiently sets out the claim of the plaintiff against the defendants and discloses a reasonable cause of action. In the result, the defendants have not made any sufficient case to warrant striking out the plaintiff’s pleadings. The appeal therefore fails and it is hereby dismissed as unmeritorious. The case is remitted to the High Court for the case to take its normal cause. Plaintiff’s costs assessed at Ghc7,000.00. I agree I also agree sgd P. BRIGHT MENSAH (JUSTICE OF APPEAL) sgd HENRY A. KWOFIE (JUSTICE OF APPEAL) sgd GEORGE KOOMSON (JUSTICE OF APPEAL) COUNSEL KWASI ASEDU KWAKYE FOR PLAINTIFF/RESPONDENT JOHN JAJA WITH IBRAHIM ANTWI FOR DEFENDANT/APPELLANT 18