BARCLAYS BANK D.C.O. (PLAINTIFF)

v.

MEMUNATU HASSAN (DEFENDANT)

(1961) All N.L.R. 865

Division: High Court (West)

Action by Bankers to recover overdraft and Interest; and for the execution of a Legal Mortgage by way of Specific Performance of an Equitable Mortgage.

In this action the plaintiff Bank claimed from the defendant, the repayment of a loan with interest thereon at the rate of 10 per cent per annum and the execution of a legal mortgage of certain lands in favour of the plaintiff by way of Specific Performance of an equitable mortgage made by the defendant to the plaintiff to secure repayment of the loan. An officer of the plaintiff Bank deposed that the defendant opened an account with the bank in 1954 and that in March 1956, she executed a Memorandum of Deposit of Title Deeds to secure an overdraft with the bank. The Memorandum was prepared by the plaintiff's agent on behalf of the defendant. When the plaintiff tendered the Memorandum in evidence, an objection was raised against its admissibility on the ground that it was executed by an illiterate without compliance with the Illiterates Protection Ordinance, Cap. 88 (1948 Ed.) The document, which provided that interest would be charged on the overdraft "at the usual rate", was admitted subject to the objection.

The officer further testified that although the defendant could and did sign her name, he did not know whether she was otherwise literate.

Counsel for the plaintiff at first conceded, that if the Memorandum were invalid under the Illiterates Protection Ordinance, the court was bound to reject it whether or not the invalidity had been pleaded. He made that concession with reference to the admissibility of the document as evidence of the defendant's liability to pay compound interest at the rate of 10 per cent per annum; a liability which arose independently of the document.

When, however, the defence raised the objection that the Memorandum, which had been specifically pleaded by the plaintiff as the basis of its cause of action for Specific Performance, did not create an Equitable Mortgage, since it did not comply with the provisions of the Illiterates Protection Ordinance, the plaintiff submitted that that objection could not be raised at the hearing, since it had not been pleaded by the defendant in her Defence.

The plaintiff tendered copies of the statements of defendant's account with the plaintiff, which were furnished to the defendant from time to time. Each showed the state of the defendant's account for the relevant month, with interest for each month in which the account was overdrawn as having been debited.

HELD:

(1) Compound interest, calculated at monthly rests, at 10 per cent per annum on an overdraft is not an unreasonable rate of interest for Bankers to charge in West Africa.

(2) A party will be deemed to have accepted the rate at which interest on a bank overdraft was calculated, if he received from the bank periodic statements of account in which the interest charged was shown as a debit, and he did not dispute the account as shown by the statements.

(3) Although objection to the validity of a document, which is merely evidentiary of a fact in issue, need not, and should not, generally, be pleaded; such objection must be pleaded if the document has been pleaded by the plaintiff as the basis of his Cause of Action.

(4) Where a Memorandum of Deposit of Title Deeds is prepared by a mortgagee's agent on behalf of an illiterate mortgagor, failure to comply with the provisions of the Illiterates Protection Ordinance renders such document unenforceable against the illiterate, but not void.

(5) Unenforceability of a document, unlike illegality, must always be pleaded; and where a party fails to plead the facts which render a document unenforceable against him, it is not open to the court to consider them.

Judgment for the Plaintiff: specific Performance Decreed as prayed.

Cases referred to:-

Pappoe v. Bank of British West Africa, (1933) 1 W.A.C.A. 287.

Ntiashagwo v. Amodu and another, (1959) W.R.N.L.R. 273.

Akohwere of Okan v. Emayabor and anor., (1959) W.R.N.L.R. 83.

S.C.O.A. v. Okon, (1959) 4 FSC 220.

Paul v. Mrs George, (1959) 4 FSC 198.

Ordinance and Law referred to:-

Illiterates Protection Ordinance, Cap. 88 (1948 Edition).

[W.R. illiterates Protection Law, W.R. Cap. 47; (1959 Edition)].

ACTION by Bankers to recover Overdraft and Interest and for Specific Performance.

O. A. Okenla for the Plaintiff.

Aiyeola for the Defendant.

Charles, J.:-This is a claim for (a) £2,268-19s-0d being the balance of money owing by the defendant by way of loan on overdraft up to the 4th December, 1960 (b) compound interest, calculated at monthly rests, at 10 per cent per annum, from the 5th December, 1960 until payment, and (c) execution of a legal mortgage in favour of the plaintiff in respect of certain land by way of specific performance of an equitable mortgage by the defendant to the plaintiff to secure repayment of the said overdraft.

The defendant has admitted liability for so much of the sum of £2,268-19s-0d as represents principal but has denied liability for so much of that sum as represents compound interest, calculated at monthly rests at 10 per cent per annum, and for subsequent interest at that rate until payment, and has denied having granted an equitable mortgage on her landed property. The novel submission on her behalf was that the plaintiff should be non-suited so as to allow of negotiations for a settlement on the basis of a reduced rate of interest. It was common ground between the parties that the rate of compound interest charged on the overdraft was 10 per cent calculated at monthly rests.

The evidence adduced, because of the defendant's admissions, was brief. An officer of the plaintiff bank deposed that the defendant opened an account with the bank in 1954 and that in March 1956 she executed a memorandum of deposit of deeds to secure an overdraft with the bank. The reception of that document was objected to on the ground that it had been executed by an illiterate and without compliance with the requirements of the Illiterates Protection Ordinance (Cap. 88 of the Laws of Nigeria 1948, which has since been replaced by Illiterates Protection Law, Cap. 47 of the Laws of the Western Region 1959). The document, which was admitted subject to the objection, provided that interest would be charged on the overdraft at the usual rate. The plaintiff's officer also tendered copies of statements of accounts which were furnished to the defendant from time to time. No objection was taken to those copies and they were admitted. They show the state of the defendant's account from time to time with interest for each month in which the account was overdrawn having been debited. The rate of interest does not appear in the statement but as the amount of overdraft increased the amount debited for interest rose appreciably. The officer also deposed that he knew that the defendant could sign her name but he did not know whether she was otherwise illiterate.

The defendant's evidence was only that she cannot read and write, except to sign her name, and that she did not mortgage her property to the plaintiff or to any one else.

In my Judgment the plaintiff was entitled to charge interest at 10 per cent, calculated by monthly rests, on the overdraft. That rate of interest is not unreasonable in West Africa (Pappoe v. B.B.W.A. 1933, 1 W.A.C.A. 287). As the defendant has received accounts from time to time showing the appreciable amounts being charged for interest and, even if she were illiterate, had the means of being informed of the amounts debited against her in that respect, and as there is no evidence that she bothered to query those amounts in any way, she must be deemed to have accepted those charges and the rate at which they were calculated. The plaintiff, therefore, in my Judgment succeeds on the first item of claim.

As to the second item of claim the plaintiff has conceded, whether rightly or wrongly that it cannot recover interest at a higher rate than simple interest of 5 per cent per annum. As the plaintiff is entitled to interest from the date of the closing of the account until payment on the sum adjudged due at the date of the issue of the writ, but from the date of Judgment to payment at no higher rate than simple interest of 5 per cent per annum, I consider it proper to award, under the second item, interest at that rate on the amount awarded on the first item.

As to third item of claim, apart from the memorandum of deposit of deeds, there is no evidence that the defendant did deposit deeds relating to her landed property. The existence of the equitable mortgage, therefore, depends on the validity or enforceability of the memorandum.

Counsel for the defendant, in support of his objection to the admissibility of the memorandum, relied upon my Judgment in Ntiashagwo v. Amodu and another 1959 W.R.N.L.R. 273 where (at 276-277) I expressed the opinion that any document which had been prepared for an illiterate was void and inadmissible in evidence if the preparer had not signed it as required by the Illiterates Protection Ordinance.

Learned Counsel for the plaintiff at first conceded that if the memorandum of deposit of deeds was invalid under the Illiterates Protection Ordinance the court was bound to reject it whether or not the invalidity had been pleaded. He made that concession with reference to the admissibility of the document as evidence of the defendant's liability to pay compound interest at the rate of 10 per cent per annum-a liability which arose independently of the document. On the question whether the memorandum could be considered as creating an equitable mortgage, learned Counsel submitted that the objection could not be considered as it had not been raised as a defence in the pleadings and he had been taken by surprise. The concession and subsequent submission savour of a blowing hot and cold, on the face of it, but no doubt learned Counsel had in mind what I think is the true principle, namely, that while objection to the validity of a document which is evidentiary only of a fact in issue need not, and should not, be pleaded, it must be pleaded if the document is one which has been pleaded by the party relying upon it as a basis of his cause of action, as is the case of the memorandum of deposit of deeds in respect of the claim for specific performance of an equitable mortgage. The latter obligation to plead invalidity is subject to the exception that when a document appears on its face or from the evidence adduced, clearly to be void for illegality the court will refuse to give effect to it although illegality has not been pleaded.