Ibrahim A.H. Basma v Adnan Y. Wanza & Ors (SC CIV APP 4 of 2007) [2010] SLSC 9 (8 February 2010)

SC. CIV. APP. 4/2007 BETWEEN: IBRAHIM A.H. BASMA - APPELLANT AND ADNAN Y. WANZA - RESPONDENT (ORIGINAL APPEAL) BASAM IBRAHIM BASMA - APPELLANT (AS ADMINISTRATOR OF THE ESTATE OF IBRAHIM A.H BASMA (DECEASED INTESTATE) AND ADNAN Y. WANZA - RESPONDENT (BY ORDER OF COURT DATED 19T! SEPTEMBER 2008)

Coram

HON. MRS. JUSTICE S. BASH-TAQI - J.S.C. HON. MRS. JUSTICE V.A.D. WRIGHT - J.S.C. HON. MR. JUSTICE M.E. TOLLA THOMPSON - JSC. HON. MR. JUSTICE G.B. SEMEGA-JANNEH_ - J.S.C. HON. MR. JUSTICE S.A. ADEMOSU - JA. COUNSEL: S.M. SESAY FOR THE APPELLANT YADA WILLIAMS AND OSMAN JALLOH FOR THE RESPONDENT JUDGEMENT DELIVERED ON THE 87 DAY OF FEBRUARY 2010 Sc J.S.C. Mr. Adnan Youssch Wanza (Appellant/ Plaintiff) was a friend and

a good customer of the father of Mr. Ibrahim A.H, Basma (the original | ‘ Respondent/Defendant) from whom he purchased various goods and, I guess, at various times. Mr. Wanza is a businessman and so was Mr. ° Basma. Prior to 1994 there had been a number of money lending transactions between Mr. Wanza and Mr. Basma by which Mr. Wanza lent money to Mr. Basma. Mr. Wanza could not remember the number of occasions prior to 1994 and the respective amounts involved. Mr. Basma himself did not provide the court with the number of the money lending transactions or the amounts involved before1994. What is clear is that the transactions were on diverse occasions and, at least, span as far back as 1986. In 1994 Mr. Wanza and Mr. Basma agreed to evidence the debt in writing. As a result Mr. Basma acknowledged the debt in the document titled’) ACKNOWLEDGEMENT OF DEBT (Exhibit Al) and issued same to Mr. Wanza. In 1997 the debt account between the parties was updated by taking into account interest that had accrued and payments made. The current debt was then acknowledged by Mr. Basma in a document titled: ACKNOWLEDGEMENT of A DEBT (Exhibit B1) and issued same to Mr. Wanza. The breakdown of the debt on this occasion . was evidenced at the back of exhibit B1 and reflected the debt account into separate Leone and Dollar components. Both exhibits Al and B1 . indicated the debt acknowledged into Leone and Dollar components. The loans were made before Mr. Wanza left Sierra Leone in 1992 for the USA; and he remained overseas upto 1997. The documents, exhibits “Al” and “Bl”, were prepared and executed before a notary public in England in 1994 and 1997 respectively. On the 17 November, 1999, Mr. Wanza caused a writ to issue claiming against Mr. Basma the following: 1) Money due and owing to the Plaintiff (Mr. Wanza) in the sum of US $ 395057-00 or its equivalent in Leones due under a deed dated the 30' January 1997.

2) Money due and owing to the plaintiff in the sum of Le . 438,725-00 due under a deed dated the 30" January

3) Interest on the said sums, at the prevailing bank rate from the 18‘ day of July, 1997. 4) Any further or other reliefs. The claim is based, simpliciter, on the acknowledgment of the debt evidenced in exhibit B1 and this fact is reflected by the particulars of claim. Mr. Basma in his defence pleaded the provisions of the Moncy lenders Act Cap. 240 of the laws of Sierra Leone 1960. Mr. Basma pleaded, further or in the alternative, satisfaction of the debt and payment in excess and counter-claimed for the excess payment. In the Reply and Counter-claim Mr. Wanza joined issue with Mr. Basma and also denied the Counter-claim. The pleadings, in my view, could have been crafted to better reflect the issues in controversy. In his judgement the learned trial Judge went to great length in restating ° the pleadings and narrating the evidence of the witnesses and the . addresses of counsel. This covered pages 159 to 174 inclusive. Thereafter he proceeded upon what he called a consideration of the provisions of the Moneylenders Act, 1960, Cap 240, by reproducing sections 2 to 5, inclusive, and then repeated some portions of the evidence relating to the loans and percentages of interest charged. Thereafter, he cited some foreign cases relevant to the issue of moneylending. The learned trial Judge then concluded thus: “Having considered the evidence in its entirety, I have to ask myself this question. As it (sic) established that the plaintiff gave a friendly loan to the defendant considering the extortionate and oppressive interest rates on the loan of one hundred percent per annum? The only opinion I am able to form is that in no stretch

of the imagination can these loan transaction be called . friendly loans” With due respect to the trial Judge, I do not think he gave due consideration of the evidence by carrying out a proper analysis of the evidence and there from making primary findings of fact relevant in the application of the law relating to Moneylending in the determination of the several issues pertaining to the claim, not the least, answers to questions that can lead to the conclusion whether a lender is a money lender or not under the provisions of the Moneylenders Act, 1960, Cap

240. The exceptions are what amounted to findings of fact of high interest rates reaching 100 percent per annum on some of the loans and that the loans were not friendly due to the “extortionate and oppressive interest rates”. These findings of fact led the learned trial Judge to conclude that Mr. Wanza was a moneylender and, since there was evidence that he had no moneylender’s licence, he further concluded that the loans to Mr. Basma were illegal and therefore void. . In the judgement of the Court of Appeal the Court held the view that “the main issue at the trial was whether the transaction was a money . lending transaction which offended the MoneyLenders Act Cap 240 of the laws of Sierra Leone, and if it does was illegal and void”. The court then reproduced section 2 of the Moneylenders Act,1960, which defines “Moneylender” under the Act and proceeded to illustrate who is and who is not a money lender by quoting dicta from foreign sources. In conclusion, the presiding Justice concluded that in his opinion Mr. Basma “has led no evidence to raise the claim of a money lender on the part of Appellant (Mr. Wanza) as such the exceptions in section 2 of the Act does not arise for consideration”. The presiding Justice proceeded to deal with the issue of interest and repeated the quotation by the trial Judge of the dicta of Lord Deolin in Hone V. Choong Fah Rubber Manufactory (1962) AC 209 at pp. 218 and 219 thus:

- “Where it is found that a person has lent money at . interest or has lent money in consideration of a larger sum being repaid such person is under section 3 of the money lenders ordinance presumed to be a money

lender unless he proves the contrary” Of course Lord Deolin was not referring to our Moncylenders Act, 1960, which has no similar section. This was correctly pointed out by the learned presiding Justice and who also concluded that an (“extortionate and oppressive interest rate”) on a loan does not make one a moneylender. This may well be -so but is it not legitimate to consider drawing the inference from the charges of “extortionate and oppressive interest rates”, especially where the rates in many of the instances exceeded or exceeded by far the bar set by law, that the loan transactions were not friendly in the ordinary sense of the word and thereby reflect business transactions by a moneylender — hopefully not of the perjorative or offensive term that FARWELL J. had in mind in the quotation from . Litchfield Vs Dreyfus (1906) 1KB 584 at PP 589 - 590 by the presiding

Justice.

In my view the Court of Appeal did not consider or evaluate the facts of the case. The Court considered the law relating to what constitute a moneylender and then concluded that charges of “extortionate and oppressive interest rates” on loans do not make someone a moneylender under the provisions of the Moneylenders Act, 1960. Apart from the question of interest, there are other factors to be considered in determing whether Mr. Wanza was carrying on the business of a money lender, such as, the number, frequency and regularity of the loan transactions to connote “a system and continuity” and whether the establishment of such a system end continuity of loan transactions in respect of one borrower can amount to a moneylending business under the Moneylenders Act, 1960. Failure to consider or properly evaluate the

Ss > evidence as it pertains to the issues in the controversy or that need to be . determined by the trial court opens the way for the appellate court to evaluate the evidence and make findings of fact necessary for a proper . application of the relevant law and for the determination of the issues Like the trial Judge and the Court of Appeal, I am very much interested in the issue of the interest charges. The interest of the trial Judge and that of the Court of Appeal in the issue of the interest charges was based on their relevance in determining whether Mr. Wanza was a moneylender under the provisions of the Moneylenders Act, 1960. My interest in the issue of the interest charges is directed to the question of their legality /illegality. However, my perception of the issue is bi-faceted and so will be my approach. The learned trial Judge, unlike the Court Appeal, did make a finding of fact in regard to the rates of interest charged; he concluded that rates up to 100 percent per annum were charged. I have read the evidence, particularly that of Mr. Wanza and Mr. Basma, and have come to the conclusion that the loan transactions started way back in 1986 and . since then a “running loan account” was established between the . parties. The evidence shows that the loans were not one off “loan” in which a loan was given and subsequently payment concluded before another loan was granted but that accrued interest and further loans were added and these too bore interest. (See the evidence of Mr. Basma (DW1) from pages 47 to 52 of the record). From the same body of evidence, I conclude that the interest rates charged were varied and that at the initial stages interest of 100 percent per annum were charged by Mr. Wanza (See P. 47 L 32-33; P48 L 16-17 and L 22; P 49 L19-20 and L 35; PSO L 17 and L 28; P51 L29; P52 L2) but these gradually reduced as the quantum of the debt inereased. Under cross-examination (See PP 71 to 74 of the record), Mr. Basma was not challenged as regard the rates of interest charged and of the nature of the accumulation of the debt. Mr. Edwards, of Counsel, in cross-examining Mr. Basma, appeared

more interested in establishing the debt as acknowledged by the . acknowledgement of the debt (Exhibit B1) and not as to how the debt came about and accumulated. The evidence of Mr. Basma on the high . rates and changing rates of interest is given credence by the almost total absence of evidence by Mr. Wanza on the interest rates charged and the lack of any definitive rate of interest claimed on the writ. In conclusion, | find that interest rates ranging from 100 to 48 percent per annum were charged; and only after the debt account was converted into a Leone and Dollar components that the rates for the Leone and Dollar components stabilized at about 48% and 19% respectively. I would have to consider the effect of the provisions of section 12 of the Moncylenders Act, 1960, which provides: 12(1)The interest which may be charged on loans, whether by a moneylender or by any person other than a moneylender shall not exceed the respective rates specified hereunder, namely: . (a} one loans secured by a first charge on any real or personal property, or by the indemnity . or personal guarantee of a third party, simple interest at the rate of 15 per centum per annum for the first £500 or part thereof and at the rate of 12 per centum per annum on any amount in excess of £500;

(b) on loans secured by a second charge on any real-or personal property, simple interest at the rate of 17% per centum per annum for the first £500 or part thereof and at the rate of 15 per centum per annum on any amount in excess of £500;

3u. (c) on unsecured loans simple ot at the . rate of 48 per centum per annum Even the rates charged and/or compounded contravened the provisions of section

12. In fact, which-ever way you look at the rates charged they simply exceeded the rates stipulated in paragraphs (a) (b) and (c) of section 12, Even Mr. Wanza’s Statement of Case admits rates higher than the rates permitted by section 12(1) (a) and (b) bearing in mind that the loans were secured by cheques from Mr. Basma. For instance paragraph 2.9.6. of Mr. Wanza’s Statement of Case dated the 11t November, 2008 states: “compound interest was then calculated on the said sum at the rate of 42.5% percent per annum for the period 30-6-1992 to 30-6-1994. This constitutes the Leone acknowledgement of debt by the Appellant (Mr. Basma) at page 184 of the records” (Brackets provided) Page 184 depicts exhibit “Al” - the acknowledgement of debt by Mr. : Basma to Mr. Wanza. Again at paragraph 2.9.12 Mr. Wanza admits in his said Statement of Case as follows: “Compound interest on the Leone account was initially 42.5% which by the year 1997 when the Appellant (Mr. Basma) failed to liquidate his indebtness to the respondent (Mr. Wanza) dropped to 40%” (Bracket Provided) Both the 42.5% and the 40% rates exceed the stipulated rates in section 12(1)(a) and (b) without even bringing into play the compound nature of the rates charged. Further, the admissions do not even take into account that the debts predate 1992 and that prior 1992 when the debts were

first incurred interests was charged upto 100%. (See the 3F of Mr. . Basma at P. 48 L 17 and 22 of the record). It was these loans and accrued interests in the running loan account that were computed and . acknowledged in exhibit “A1” and further updated in exhibit “BI”. It is clear from the provisions that the rates Mr. Wanza charged interest on the loans, secured or unsecured, granted to Mr. Basma contravened the provisions of section 12 of Moneylenders Act. The loans could rightly be said to have been secured (guaranteed) by the cheques issued by Mr. Basma to Mr. Wanza (See P 48 L 6 of the record) Section 12 only permits simple interest. Mr. Yada Williams, of counsel for Mr. Wanza, had ably argued that contravention of section 12 merely attracts a fine as a penalty under section 13 which states: “13 any money lender who loans at a rate of interest higher than that authorized by this Act shall be liable on conviction to a penalty not exceeding fifty pounds in respect of each such loan” . He further argued that the loan is not void by reason of such a breach. . This may well be so but I fail to see how the argument can be extended to protect the illegally/unlawfully obtained gains of Mr. Wanza from acts which the Moneyicndcrs Act, 1960, is intended to prevent in order to protect people from being over charged interest. The provisions of section 13 is no bar to the Court ordering the interest, or excess interest, void; or order forfeiture of such ill gotten gains; or refusing to allow Mr. Wanza to continue to enjoy benefits derived from illegal acts or advantages. It is clear that Mr. Wanza breached the provisions of section 12 of the Moneylenders Act, 1960, in terms of the interest rates charged being higher than permitted by the section and that he also breached the provisions by charging compound interest. That Mr. Wanza did charge compound interest is not contested but Mr. Yada Williams argued with

Bob. characteristic lucidity that an agreement to charge compound interest, or . evidence of a course of dealings betwcen the parties, makes the charging of compound interest lawful and enforceable and, in the instant casc, . takes that element of the transaction outside the ambit of the provisions of the Moneylenders Act, 1960, in particular, section 12(1) (c). Mr. Yada Williams referred to the two’ documents {Exhibits Al and Bl) acknowledging the debt as evidence of an agreement to charge compound interest and/or manifest a course of dealing between Mr. Wanza and Mr. Basma. In support of the submission, Mr. Yada Williams cited Halsburys laws of England, 4* edition, at P. 53, paragraph 107, under the rubric “compound interest” and also cited a few ancient case law. Mr. Yada Williams exposition of the law on compound interest, in my view, is a reflection of case law or the common law and has no negative impact and does not reflect the law on statutory provisions, in particular, section 12 of the Moneylenders Act, 1960. The quotation of the learned authors of Halsburys laws of England, 4 “edition; ibid, made by counsel and stated thus: “compound interest will not be allowed except there is an agreement, express or ¢mplied, to pay it or where the debtor : has employed the money in trade and has presumably earned it, or ’ unless its allowance is in accordance with the usage of a particular trade or business” does not advance the argument of Mr. Yada Williams in terms of the meaning and effect of section 12 of the Moneylenders Act, 1960 — statutory provisions as opposed to case law. Clearly, that the quotation is based on case law is made manifest by the numbered references in the quotation of decided cases dating back to the 1800s. The quotation is better appreciated in the broader context of when interest is payable at common law and, in this regard note what the learned authors of Halsburys laws of England, 4‘ Edition, at P. 54, paragraph 108, had to say: “At common law interest is payable (1) where there is an express agreement to pay interest; (2) where an