F. I. ADETULA (APPELLANT)
J. A. BAKARE (DEFENDANT)
(1964) All N.L.R. 447
Division: High Court, Lagos
Date of Judgment: 31st January, 1964
Case Number: LD/1A/64
Before: Onyeama, Ag. C.J.
The respondent, a moneylender, gave a loan to the appellant; the memorandum of the contract shows the loan to be £240 but the appellant maintains that he received £40; the memorandum does not set out the name and branch of the bank on which the cheque was drawn in accordance with section 12(3)(aa) of the Moneylenders Act, Cap. 124, and no evidence was given that the cheque by means of which the loan was made was drawn to the order of the appellant. The Magistrate, however, found against the appellant because he had signed and received a copy of the memorandum showing a loan of £240.
(1) A moneylender who does not set out, in the memorandum of contract, the name of the bank and the branch thereof on which the cheque by means of which the money was lent and the number of the cheque, cannot take out legal proceedings to recover the money he has lent; therefore, judgment in this case ought to be given in favour of the appellant.
(2) Since the moneylender is the person seeking to enforce the contract, the onus is on him to prove that the sum of £240, and not £40, was given to the debtor, and where there is a doubt the moneylender must be held not to have discharged the burden cast on him.
Case referred to:-
Kasumu v. Baba Egbe (1956) 3 All. E. R. 266.
Laws referred to:-
Moneylenders Act, Cap. 124 section 12.
Moneylenders (Amendment) Act, No. 44 of 1960.
Coker, for the Appellant.
Bashua, for the Respondent.
Onyeama, Ag. C. J. of Lagos:-I think that this appeal must be allowed.
The respondent, a moneylender, gave a loan to the appellant. The transaction was governed by the Moneylenders Act Cap. 124 and the Moneylenders (Amendment) Act 1960.
The latter Act provides for an addition to section 12 of the principal Act as follows:-
"12A (1) Every moneylender shall maintain a current account with a licensed bank.
(2) No contract by a borrower or his agent for the repayment or securing of money lent to the borrower or to any agent on his behalf by a moneylender or for the repayment by the borrower or by any agent on his behalf of interest on money so lent and no security given by the borrower or by any such agent as aforesaid in respect of any such contract shall be enforceable unless the money lent was lent by means of a cheque drawn by the moneylender upon his current account at a licensed bank to the order of the borrower."
Section 12 of the principal Act was further amended by the addition of a paragraph (aa) the effect of which is to require the memorandum of the contract to contain the name of the bank and the branch thereof on which the cheque by means of which the money was lent was drawn and the number of the cheque.
A moneylender who does not comply with these provisions of the Ordinance loses any right to take legal proceedings to recover the money he has lent.
As Lord Radcliffe said in Kasumu v. Baba Egbe (1956) 3 An E.R. 266, 271:
"Such requirements as that the moneylender must be registered or licensed, must use his authorised name, must procure a note or memorandum of the contract signed personally by the borrower, must keep a book in which is entered a contemporary record of the transaction strike indifferently at all moneylenders' loans, however moderate the terms of any particular transaction. When the governing statute enacts that no loan which fails to satisfy any of these requirements is to be enforceable it must be taken to mean what it says, that no court of law is to recognise the lender as having a right at law to get his money back."
There was no evidence before the magistrate that the cheque by means of which the loan was given was drawn to the order of the debtor, The memorandum of agreement in evidence did not state the name of the bank (although it states the initials of the bank) and did not state the branch of the bank.
The magistrate thought it was possible the debtor had not been given a copy of the memorandum as required by law. "He thought also that it was possible the debtor was given only £40 and not £240. He however found against the debtor because he had not availed himself of the safeguards designed for his protection by signing (possibly falsely) that he had received a copy of the memorandum and £240.
This, to my mind, was a wrong approach to the case. The magistrate obviously failed to consider the fact that a debtor is usually at a disadvantage in a moneylending transaction and under the pressure of financial circumstances.
The lender is the person seeking to enforce the contract and the onus of proof is on him. Therefore where there is a doubt he must be held not to have discharged the burden cast on him.
In the case under appeal the memorandom of contract did not set out the branch of the bank on which the cheque was drawn and for this breach of section 12(3)(aa) of Cap. 124 the lender should have been unable to recover.
The appeal is allowed.
The judgment of the magistrate is reversed and the claim is dismissed with costs in the court below assessed at £10. 10. 0. and in this Court assessed at £26. 5. 0.