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BARCLAYS BANK D. C. O.
HIGH COURT (WEST)
9TH NOVEMBER, 1961
BEFORE: CHARLES, J.
O.A. Okenla for the Plaintiff.
Aiyeola for the Defendant
BANKING AND FINANCE:- Banking practices – Overdraft — Principles guiding applicable rates of interest on overdraft — Whether receiving without protest regular Statement of Account showing rate of interest charged is deemed acceptance of that rate
BANKING AND FINANCE:- Mortgage – Equitable Mortgage – Specific performance – Whether a claim for the execution of a legal mortgage can be based on the execution of a memorandum of deposit of deeds
DEBTOR AND CREDITOR:- Recovery of loan extended by way of overdraft on deposit account secured by way of legal mortgage – Where debtor is illiterate – When memorandum of deposit would be deemed unenforceable
REAL ESTATE/LAND LAW – MORTGAGE:- Creation of equitable mortgage over landed property – Relevant consideration
REAL ESTATE/LAND LAW – EQUITY: – Specific Performance – Execution of Legal Mortgage in lieu of Equitable Mortgage – How treated
COMMERCIAL LAW – CONTRACT – ILLEGALITY:- Memorandum of deposit – Where prepared by bank agent on behalf of the illiterate depositor – Whether fact of illiteracy where pleaded would render document unenforceable against depositor but not void
INTERPRETATION OF STATUTES: – Illiterates Protection Ordinance Cap. 88, (1948 Ed. Laws of the Federation) (W.R. Illiterates Protection Law, Cap. 47; 1959 Ed. W.R. Laws) — Legal status of document executed by illiterate without compliance with the Illiterate Protection Law – Void but unenforceable
PRACTICE AND PROCEDURE – COURT: – Case in Review – Ndashagwo v. Amodu and another 1959 WR.N.L.R. 273 (at pp. 276-7) – Effect of non-compliance with the Illiterate Protection Law on a document – Whether illiterate can depend on it – Enforceability of such document by the preparer against an illiterate in respect of legal rights created by it in favour of the preparer
PRACTICE AND PROCEDURE:- PLEADING — When objection to the validity of a document need to be specifically pleaded – Need to plead unenforceability of document – Exceptions thereof – Attitude of court to a document which is void for illegality on its face or from evidence adduced
CHILDREN AND WOMEN: Women in Business – Illiterate user of banking services – Whether legal mortgage can arise via the execution of a memorandum of deposit of deeds – Legal status of document executed by illiterate without compliance with the illiterate Protection Law – Relevant considerations
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 [rates] 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 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 rates, on the overdraft. That rate of interest is not unreasonable in West Africa (Pappoe v. B.B.WA. 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 fast 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 Ndashagwo v. Amodu and another 1959 WR.N.L.R. 273 where (at pp. 276-7) 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.
I am satisfied from further consideration of my remarks in Ntiashagwo’s case, that non-compliance with the requirements of the Illiterates Protection Ordinance by the preparer of a document renders the document void, were too widely stated and inaccurate on that account. What is the exact general effect of such non-compliance on the enforceability of a document and its admissibility as evidence need not be considered here. It is sufficient to say that the document is not rendered void in the strict sense, as obviously the illiterate can rely upon it (Akohwere of Okan v Emayabor and another 1959 W R.N.L.R. 83) but it is unenforceable by the preparer against the illiterate in respect of legal rights created by it in favour of the former (S.C.OA. Zaria v Okon 1959, 4 F S.C. 220).
The memorandum of deposit seems clearly to have been prepared by the plaintiff’s agent on behalf of the defendant. Consequently, if the defendant were an illiterate the document would be unenforceable against her but not void But, as the defendant has not pleaded the necessary facts which render the document unenforceable against her, it is not open to the Court to consider them: unenforceability of a document, unlike illegality, must always be pleaded (Paul v Mrs George 1959,4 F.S.C. 198). I should perhaps add that even if the effect of non-compliance with the Illiterates Protection Ordinance were to render the memorandum of deposit void for illegality, which it was not, I do not think that this would have been a case for the court to hold the document void for illegality when illegality has not been pleaded. The plaintiff may have had evidence as to the defendant being literate which it was surprised into not calling so that all the relevant evidence as to illegality may not have been adduced.
It follows that the plaintiff is entitled to judgment on the third claim, that for specific performance.
There will be judgment for the plaintiff on all three items of claim with costs of the action.
Judgment for plaintiff.