–
[CONSOLIDATED SUITS]
GBADAMOSI BABA-EGBE
V.
PATIENCE KASUMU AND OTHERS
THE WEST AFRICAN COURT OF APPEAL, HOLDEN AT LAGOS, NIGERIA
22ND DAY OF FEBRUARY, 1954
APPEAL NO. 58/1953
2PLR/1954/57 (WACA)
OTHER CITATION(S)
2PLR/1954/57 (WACA)
(1954) XIV WACA PP. 116 – 122
LEX (1954) – XIV WACA 116 – 122
–
BEFORE THEIR LORDSHIPS:
FOSTER-SUTTON, P.
VERITY, C.J., NIGERIA
COUSSEY, J.A.
–
BETWEEN:
(APPEAL IN CONSOLIDATED CROSS-ACTIONS)
GBADAMOSI BABA-EGBE – Appellant
AND
PATIENCE KASUMU AND OTHERS – Respondents
–
ORIGINATING COURT(S)
Appeal by the mortgagor in consolidated suits, the other party being the administrators of the mortgagee’s estate
–
REPRESENTATION
F. R. A. Williams — for the Appellant
J. I. C. Taylor — for the Respondents
–
ISSUE(S) FROM THE CAUSE(S) OF ACTION
DEBTOR AND CREDITOR LAW:- Moneylenders’ Ordinance (Cap. 136), section 19(2), (3), (4) — Moneylender’s duty to keep book and enter details-Moneylender’s default — Relief to borrower
DEBTOR AND CREDITOR:- (West Africa) — Moneylender — No memorandum of loan as required by Nigerian Money Lenders Ordinance — Right to return of security for loan — Whether borrower put on terms
ESTATE ADMINISTRATION AND PLANNING LAW:- Suit against administrators of estate of deceased person — Claim for order of redemption of property which plaintiff had mortgaged to deceased person via deed — Alternative claim for a declaration that the deed of mortgage is void — How treated
–
PRACTICE AND PROCEDURE ISSUE(S)
ACTION:- Averment and admission showing claim on a moneylender’s transaction unenforceable — Omission of borrower to plead the Moneylenders’ Ordinance in terms
INTERPRETATION OF STATUTES:- Nigerian Money Lenders Ordinance (Consolidated Ordinances of Nigeria, c 136), s 19(2), (3), (4) — Interpretation of
–
CASE SUMMARY
This was an appeal in consolidated cross-actions, the appellant being the mortgagor and the respondents being the administrators of the estate of the mortgagee.
The mortgagor claimed in his suit an order for redemption or, in the alternative, a declaration that the mortgage deed was void, an account of rents and profits, and recovery of possession. The administrators in their suit claimed specific performance of an agreement whereby the mortgagor, in consideration of a certain sum due on the mortgage, had agreed to assign his interest in the mortgaged property.
The mortgagor pleaded in his suit, on the alternative claim for a declaration that the mortgage deed was void, that the true state of the account could not be ascertained as the deceased had kept no book; that the administrators had assumed it was the amount stated in the mortgage deed as principal lent, whereas the deceased had advanced sums amounting to less on receipts as part payment towards purchase of the property. In their defence the administrators admitted that no book had been kept in which the principal advanced was entered but relied on the recital in the mortgage of the agreement to loan a specified sum as proof that that sum had in fact been advanced.
In the administrators’ suit for specific performance the mortgagor did not plead that a book was not kept by the deceased mortgagee.
The suits were consolidated. At the hearing it was contended for the mortgagor, in view of his averment in his suit and the admission in the defence therein, that the deceased being a moneylender and the mortgage a moneylending transaction, no claim on the mortgage was enforceable as the mortgagee, contrary to section 19(2), (3), (4) of the Moneylenders’ Ordinance, had not kept a book or made entries of the loan. For the administrators it was objected that the Ordinance had not been pleaded and therefore the point could not be raised. The trial Judge apparently upheld the objection: his judgment was for redemption upon payment of the amount found to be due after account taken, which amount was later incorporated in the judgment. It is the point raised in the mortgagor’s appeal.
(The text of section 19(2), (3), (4) is given in the judgment infra. Paragraph (2) requires a moneylender to keep a book and enter in it, inter alia, the amount of the principal, and paragraph (3) to enter it forthwith on the making of the loan; paragraph (4) makes unenforceable any claim in case of non-compliance.)
Counsel for the administrators conceded that the claim for moneys due on the mortgage could not be enforced as the above section had not been complied with by the mortgagee, but invited the Court of Appeal to hold that the mortgagor had failed to plead the Ordinance and must be deemed to have waived its protection, and that in any event he should be put on terms of repaying the mortgage debt as he was invoking the equitable jurisdiction of the court.
–
DECISION(S) OF THE WEST AFRICAN COURT OF APPEAL
Held (allowing the appeal of the mortgagor) that:
(1) In these cases, consolidated as they were for hearing, the administrators of the mortgagee’s estate had sufficient notice of a fact which rendered their claim on the mortgage unenforceable and themselves admitted that fact; they cannot have judgment to enforce a contract arising from a transaction which is declared to be unenforceable simply on the ground that the mortgagor had not in terms referred to the Moneylenders’ Ordinance.
(2) Where there has been non-compliance with section 19 of the Ordinance the borrower can apply to the Court for relief; he is not put upon terms as to repayment of the money that is due, but is entitled to keep the money he has received and nevertheless have a declaration that the contract under which he obtained the money is unenforceable and to delivery up and cancellation of any documents given by way of security in pursuance of the contract.
Cases cited:-
(1) In re Robinson’s Settlement (1912) 1 Ch. 717, at p. 725.
(2) Chapman v. Michaelson (1908), 2 Ch. 612.
(3) Cohen v. Lester Ltd. (1938), 4 A.E.R. 188.
(4) Lodge v. National Union Investment Co. Ltd. (1907), 1 Ch. 300.
(Editor’s Note: The contention for the mortgagor, based on the pleadings in his suit, that the mortgagee was a moneylender-a contention which was not contested-may have been founded on the presumption created by section 3 of the Moneylenders’ Ordinance, that (subject to certain exceptions) ” any person who lends money at interest or who lends a sum of money in consideration of a larger sum being repaid shall be presumed to be a moneylender until the contrary be proved”.)
–
–
MAIN JUDGMENT
The following Judgment was delivered:
COUSSEY, J. A.
In the first of these actions which were consolidated for trial, the plaintiff sued the defendants as administrators of the estate of C. O. Kasumu, deceased,
(i) for an order for redemption of property at 55 Great Bridge Street, Lagos, which the plaintiff had mortgaged to C. O. Kasumu by deed dated 22nd August, 1945. In the alternative for a declaration that the deed of mortgage is void;
(ii) an account of all rents and mesne profits received by C. O. Kasumu and by the defendants as administrators since Kasumu’s death;
(iii) recovery of possession of the mortgaged property.
In the second action the administrators of C. O. Kasumu as plaintiffs sued the first defendant (plaintiff in the first action) for specific performance of an agreement whereby in consideration of the sum of £2,250, being principal and interest money due on the mortgage referred to, the plaintiff in the first action (who will hereafter in this judgment be referred to as the mortgagor), agreed to assign his leasehold interest in the mortgaged property to the deceased C. O. Kasumu.
There was a further claim that a purported sale by the mortgagor to the second defendant in the second action be set aside. The second defendant was dismissed from the suit. As nothing turns on the second claim in deciding this appeal, it need not be further referred to.
As to the alternative claim under the first head of claim in the first suit, namely that the deed of mortgage is void, the plaintiff by his statement of claim alleged that the true state of the mortgage account could not be ascertained as C. O. Kasumu (who will be referred to as the mortgagee) kept no book. In consequence, it was alleged, the defendant-administrators had assumed that the principal amount lent was £2,000, being the sum expressed in the deed of mortgage, whereas, according to the mortgagor, sums of money amounting in the aggregate to £1,156 were advanced by the mortgagee who took receipts for these sums, not as advances on account of the mortgage, but as part payment towards the purchase-price of the property.
In the defence filed, it was admitted that no book was kept in which was entered the principal amount advanced to the plaintiff but the defendants relied on the recital in the deed of mortgage of the agreement to loan £2,000 as proof that £2,000 was, in fact, advanced. The administrators also claimed 15 per cent interest.
In the second suit, No. 77/1950, the mortgagor did not plead that a book was not kept by the mortgagee in answer to the claim for specific performance by the execution of a deed of assignment of the property to the administrators of the deceased mortgagee.
At the hearing of the consolidated actions, Mr. Williams for the mortgagor raised an important contention having regard to the allegations in the statement of claim in the first suit and the admission already referred to, namely that the mortgagee being a moneylender and the mortgage a moneylending transaction, no claim on the mortgage was enforceable as the mortgagee, in contravention of section 19 (2)-(4) of the Moneylenders’ Ordinance (Cap. 136), had not kept a book or made entries of the loan as required by the sections of the Ordinance referred to. To this Mr. Taylor for the administrators objected that the Moneylenders’ Ordinance had not been pleaded and therefore the point could not be raised. The learned Judge appears to have upheld the administrators’ submission. In his judgment the learned Judge in effect held that the claim on the mortgage was enforceable, for he ordered an account to be taken by a referee and entered an interlocutory judgment for redemption of the mortgaged property on ascertainment of the amount due on the mortgage and payment thereof to the estate of the deceased mortgagee.
The account having been enquired into and reported upon by the referee, the Court on the 26th February, 1952, adopted the referee’s report, which found £1,541 2s. 6d. to be due and owing on the mortgage deed, added thereto interest at 15 per cent and entered judgment accordingly in the consolidated suits.
Before judgment, however, Mr. Williams had preserved the mortgagor’s attitude by raising his earlier contention that the claim on the mortgage was unenforceable for the reasons and by virtue of the Ordinance already set out. This point is not considered in the final judgment as the Court at that stage was apparently concerned with the referee’s report only. It is the only point raised in the appeal to this Court but other matters arise therefrom for the consideration of the Court.
Section 19 (sub-sections (2). (3) and (4) of the Moneylenders Ordinance (Cap. 136) provide:-
“(2) Every moneylender shall keep a book which shall be securely bound and paged so that leaves cannot be removed or inserted without apparent damage, in which he shall enter in connexion with every loan made by him:
“(a) the date on which the loan was made;
“(b) the amount of the principal; “
“(c) the rate of interest;
“(d) all sums received in respect of the loan or the interest thereon, with the dates of payment thereof,
“and shall produce such book when required to do so by any court.
“(3) The entries in the said book shall be made forthwith on the making of the loan or the receipt of sums paid in respect thereof as the case may be.
“(4) Any moneylender who fails to comply with any of the requirements of this section shall not be entitled to enforce any claim in respect of any transaction in relation to which the default shall have been made. He shall also be guilty of an offence under this Ordinance and shall be liable on conviction to a tine of ten pounds or in the case of a continuing offence to a tine of five pounds for each day or part of a day during which such offence continues.”
After some argument and finally under pressure Mr. Taylor for the administrators conceded that the claim for moneys due on the mortgage could not be enforced as the above sections of the Ordinance had not been complied with by the mortgagee. He invited the Court to hold, however, that the mortgagor had failed to plead the Ordinance and that having failed to do so, he must be deemed to have waived the provisions of the Ordinance which had been enacted for his protection as a borrower. He also maintains that in any event the mortgagor should be put on terms of repaying the mortgage debt as his is an appeal.to the equitable jurisdiction of the Court.
In considering the first contention, it is impossible to disregard the fact that the mortgagee’s claim is admittedly unenforceable. It is true that by his writ the mortgagor sought to have the deed declared void, and that the only fact alleged in his statement of claim in support of that part of the claim is that the mortgagee kept no book. As, however, the administrators in their defence admit that no book was kept and it is now conceded that the claim on the mortgage is unenforceable, the point of pleading ceases to be a major matter for decision. But I would hold that in these cases, consolidated as they were for hearing, the administrators not only had sufficient notice of a fact which rendered the claim unenforceable, but they themselves admitted that fact.
Moreover I would, with respect, adopt the reasoning of Cozens Hardy, M.R., in In re Robinson’s Settlement (1):-
“No Court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing an obligation alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the Court and if the person invoking the aid of the Court is himself implicated in the illegality.”
He goes on:-
“I think it would be quite preposterous for us to allow the plaintiff to recover against Stevens upon this illegal contract simply on the ground that he has not in terms referred to the Moneylenders’ Act.”
In Chapman v. Michaelson (2), Eve, J., at p. 621 would not take upon himself to determine whether a statutory illegality could be waived, but I think he would have held that it could not if the question had arisen on the form of the pleadings as it does in this case.
In the present case the claim on the contract is by the Ordinance declared unenforceable; the contract is not declared illegal, but the principle is equally applicable.
Section 19 (4) of the Ordinance does not impose a penalty once for all. It goes on to provide that in the case of a continuing offence a person shall be liable to a fine for each day the offence continues. In such case the omission to keep a book is a prohibited act and therefore an illegal act. In framing his writ for a declaration that the deed of mortgage is void, the plaintiff may well have reasoned that the omission to keep a book being an illegal act; it rendered the contract in respect of which the omission had been made also illegal and therefore void.
The true position, however, as stated already is that section 19 (4) does not declare the transaction itself illegal or void, but provides that no claim in respect of it shall be enforced.
Coming to Mr. Taylor’s second submission-this distinction between an illegal contract and an unenforceable contract was considered in the case of Cohen v. Lester Ltd. (3), which bears some marked similarities to the present case. In that case it was admitted that the moneylenders did not comply with the sixth section of the Moneylenders’ Act, 1927, which provides that no contract for repayment of money lent and no security given in respect of such contract shall be enforceable unless a note or memorandum of the contract be made and signed by the borrower, etc.
It was conceded that the contract was unenforceable but it was contended, as Mr. Taylor has contended here, on the authority of Lodge v. National Union Investment Co. Ltd. (4) that as the plaintiff was applying to the equitable jurisdiction of the Court (as the mortgagor does in the present case) he could get that relief which, in Cohen v. Lester Ltd. (3) was for an order for return of jewellery deposited as security, only on the terms of paying the sum due.
In his judgment Tucker, J., said at p. 193:-
“I think that a distinction has to be drawn between a case like that of Lodge v. National Union Investment Co. Ltd. where the transaction was illegal and a transaction of this kind, which the statute says shall be unenforceable.”
And earlier at p. 192:-
“What I have to decide is whether there is a distinction between contracts which are stated to be illegal and those which are stated to be unenforceable with regard to the principle applicable to the obtaining of relief and getting repayment of money paid by way of security. It is common ground that, under section 6 where there has been non-compliance, the borrower can apply to the Court for relief, and amongst the reliefs that he can get is an order for the delivery up of promissory notes that have been given in respect of transactions, and also for the delivery up and/or cancellation of bills of sale that have been given by way of security. It has been decided, and it is accepted by counsel as being the law, that in those cases the borrower is not put upon terms as to repayment of the money that is due, but is entitled to keep the money he has received and nevertheless have a declaration made that the contracts under which he obtained the money are unenforceable, and so he is entitled to delivery up and cancellation of the notes and/or bills of sale given in pursuance of those contracts.”
In my opinion the principles stated above apply in this case and it follows that Mr. Taylor’s prayer that the mortgagor be placed on terms cannot be upheld. It is only necessary to add that in suit No. 77/50 the administrators, in praying specific performance that the mortgagor do execute a deed of assignment for £2, 700 as due on the mortgage, are in my opinion seeking to enforce a contract arising from a transaction which is declared to be unenforceable. “The statute is like a tyrant; when he comes he makes all void.” It follows that the claim in suit No. 77/50 wholly fails and the judgment of the Court below finding £1,541 2s. 6d. and interest to be due to the administrators is set aside.
In suit No. 42/50 the mortgagor is entitled to (1) a declaration that the mortgage transaction is unenforceable by reason of the mortgagee’s non-compliance with the Moneylenders’ Ordinance (Cap. 136), and (2) recovery of possession of the premises, which involves the cancellation and delivery up of the deed of mortgage and delivery up of the mortgagor’s title deeds for although this is not specifically claimed by the mortgagor, it would manifestly be inequitable for the administrators to retain the deeds.
–
FOSTER-SUTTON, P.
I concur.
–
VERITY, C.J., NIGERIA.
I concur.
–
Appeal of the mortgagor allowed; consequential orders for relief.
–