CAPE COAST - A.D 2018
ESM COMPANY LIMITED - (Plaintiff/JC/Respondent)
BEST POINT SAVINGS & LOANS CO. LTD - (Garnishee/Appellant)

DATE:  31ST MAY, 2018
CIVIL APPEAL NO:  H1/169/2017


This is an appeal by the Garnishee/Appellant against the Ruling of the High Court, General jurisdiction, Accra dated 11th March 2016. The Ruling dismissed the Garnishee/Appellants' claim to the proceeds of an Interim Payment Certificate [IPC 11] in respect of which the Plaintiff/judgment creditor/Respondent had initiated garnishee proceedings to attach for a judgment debt owed by the 2nd defendant/judgment debtor/Respondent.



The background facts are that the plaintiff/judgment creditor/Respondent sold a Quarry Plant to the 2nd defendant/judgment debtor/Respondent on credit terms. The 1st defendant issued a bank guarantee for the outstanding purchase price. The plaintiff obtained judgment against the defendants' on 22nd July 2015 for the balance of the unpaid purchase price and took out garnishee proceedings directed at the Ministry of Finance, Ghana Highways Authority and the Garnishee/Appellant herein.


At the hearing of the application, it emerged that the garnishee/appellant was not indebted to the 2nd defendant/judgment debtor/respondent. Rather, she had given two separate credit facilities to the 2nd defendant/judgment debtor/respondent on 2nd July 2015 and 7th September 2015 [see pages 258-261 and 266-268] and the proceeds of IPC 11 issued by the Ghana Highways Authority in favour of the 2nd defendant/judgment debtor for work done was to be assigned to the garnishee/appellant as part of the security for the facility.


IPC 11 was thus the subject matter of the dispute between the garnishee/appellant and the plaintiff/respondent in the Garnishee proceedings. Having heard evidence and received submissions from their lawyers, the trial court ruled that the legal interest of the plaintiff/judgment creditor/respondent had priority over the equitable interest of the garnishee/appellant. She accordingly dismissed the claim of the Garnishee/appellant and ordered a garnishee order absolute to issue.


It is this Ruling which is the subject of this appeal. The Ruling appealed is at pages 230-233 of the record of appeal.


I should make it clear that this appellate court recognizes that the party referred to as the Garnishee/appellant was in reality a “claimant”. However, the terminology “garnishee/appellant is being used for convenience sake and because that is how the appellant has described herself in the Notice of Appeal and subsequently.


Hereafter the garnishee/appellant will be referred to simply as the ‘appellant’. The Plaintiff/Judgment creditor/Respondent will be called the ‘respondent’ whilst the 1st defendant and the 2nd defendant/judgment debtor/Respondent will be referred to respectively as the ‘1st defendant’ and ‘2nd defendant’.


Grounds of Appeal:

 The appellants' Notice of Appeal was filed on 31st March 2016 with the following grounds of appeal:

i. The Ruling is against the weight of evidence;

ii. The learned Judge exercised her discretion wrongly when she treated the Interim Payment Certificate No. 11 dated 26th June, 2015 as a collateral which required registration under the Borrowers and Lenders Act, 2008 (Act 773);

iii. The learned Judge erred when she ruled that the Plaintiff/Judgment Creditor’s legal interest in the judgment has priority over Garnishee/Appellant’s joint interest in the Interim Payment Certificate No. 11 dated 26th June, 2015 with 2nd Defendant Judgment debtor;

iv. The learned Judge ignored relevant considerations in the exercise of discretion in issuing the Garnishee Order absolute notwithstanding Garnishee/Applicant’s prior interest in the Interim Payment

Certificate No. 11 dated 26th June, 2015;


As had been intimated in the grounds of appeal, the following two Additional Grounds of Appeal were subsequently filed in July 2016:

5. That the learned Judge exercised her discretion wrongly by granting an order of garnishee absolute when the evidence before her clearly showed that the Garnishee/Appellant has demonstrated cause why the sum of Gh¢4,557,324.34 under Interim Payment Certificate No. 11 dated 26th June, 2015 should not be paid to Plaintiff/Judgment Creditor/Respondent.

6. That the learned Judge was wrong in law when she treated Garnishee/Appellant’s interest in Interim Payment Certificate No. 11 dated 26th June, 2015 as equitable under the Borrowers and Lenders Act, 2008 (Act 773) when Plaintiff/Judgment Creditor/Respondent has not shown any legal interest under the said Act to override the interest of Garnishee/Appellant.



The appellants' lawyer first argued ground 2 of the appeal then grounds 3 and 6 together, grounds 4 and 5 together and finally the omnibus ground 1. On the other hand, the respondents' lawyer argued grounds 2 and 6 separately and grounds 1, 3, 4 and 5 together as in his view they were all a re-hash of the ground that the Ruling is against the weight of evidence. Having carefully reviewed the grounds of appeal, I shall follow the order in which the appellant argued them.


As a prelude to the discussion of the grounds of appeal, it is important to note that the agreement between the appellant and 2nd defendant was for a Credit Facility”. The offer letters dated 2nd July and 7th September 2015 mentioned the security for the facility to include “Assignment of IPC proceeds”; Specifically, Interim Payment Certificate #11


Section 1 (1) of the Borrowers and Lenders Act 2008, Act 773 states that it applies to

(a) a credit agreement between parties who deal at arm's length

The Meaning of ‘credit agreement’ and ‘credit facility’ is given in section 2 and 3 as follows:


“2. For the purpose of this Act a credit agreement is an agreement in the nature of a credit facility, a credit transaction, a credit guarantee or any combination of these which the lender

3. An agreement is a credit facility if in that agreement the lender undertakes

(a) to lend stipulated amounts within a specified period or at specified intervals agreed on with the borrower

(i) to the borrower,

(ii) on behalf of the borrower, or

(iii) at the direction of the borrower; and

(b) to either

(i) defer the borrower's obligation to repay the stipulated amount in paragraph (a) to the lender, …….”


There can therefore be no disagreement that the Borrowers and Lenders Act 2008 [hereafter referred to simply as Act 773] is at the foundation of the appellant's claim to IPC 11 since it was on the basis of a credit agreement/credit facility that IPC 11 was assigned as part of security for repayment.


Ground 2

 This ground faults the trial judge for exercising her discretion wrongly by treating IPC 11 as collateral which required registration under Act 773.


In the Ruling, the learned trial judge identified the issue before her as whether or not in view of the alleged “charge” on the debt in favour of the appellant; a garnishee order absolute ought to issue. She also made reference to section 25 of Act 773 on the requirement for registration of “charges” at the Collateral Registry.


The appellant is however taking issue with the trial judge’s later statements in the Ruling; that Certificate No. 11 had been used as “collateral” for the loan from the appellant, and that in the absence of registration of the “collateral” as required under Act 773, the legal interest of the respondent under the judgment had priority over the equitable interest of the appellant.


It would appear that the trial judge used the terms interchangeably. Although both are required to be registered under section 21 of Act 773, the Act distinguishes between “Collateral” and a “Charge”. Section 22 provides as follows:

Object of the Registry

22. The object of the Registry is to register charges and collaterals created by borrowers to secure credit facilities provided by lenders.


Act 773 does not define ‘collateral’. However its legal meaning can be gleaned from other sources. Black's law dictionary defines collateral to be ‘‘property that is pledged as security against a debt’’. The Merriam-Webster dictionary defines it as property pledged by a borrower to protect the interests of the lender in the event of the borrower's default’ Collateral may also be defined as a borrower's pledge of specific property to a lender.

Thus from the above definitions the term ‘property’ as pertains to collateral is used in its narrowest sense to include nothing more than corporeal property – that is to say, the right of ownership in a material object, or that object itself. The term collateral as is used in Act 773 must be taken to relate to tangible assets or property.


On the other hand, the Interpretation section of Act 773 defines a ‘charge’ to mean:

‘’charge, mortgage, security interest, lien, pledge, assignment by way of security, covenant, restriction, reservation, lease, trust, order, decree, judgment, title defect (including retention of title claim) or any other encumbrance of any nature other than liens arising by operation of law’’ (my emphasis)


Martin Hughes in his book, Legal Principles in Banking and Structured Finance 2006, defined a ‘charge’ while contrasting it with a mortgage. According to him,

''A mortgage is a security arrangement under which title is transferred to the mortgagee and a charge is a security arrangement under which an equitable interest is created without a transfer of property''.


From the definitions of a charge above, it could be said that 'a charge' encapsulates the various encumbrances that can be attached to a property as security.


The word ‘encumbrance’ is defined in Blacks Law Dictionary to mean ''a claim or liability that is attached to property or some other right and that may lessen its value, such as a lien or mortgage; any property right that is not an ownership interest''. Encumbrances are not confined to the law of property, but pertain to the law of obligations also.


It is necessary to take note that the definition of ‘charge’ by Act 773 accommodates a broader definition of ‘property’ to include all proprietary rights of a person including land, chattels, shares, debts due and any encumbrance of any nature other than liens arising by operation of law.


A debt falls within the definition of a chose in action. A chose in action describes all personal rights of property which can only be claimed or enforced by action and not by taking physical possession. Black's law dictionary defines chose in action as ''the right to bring an action to recover a debt, money or thing.''


It is defined by Hughes [supra] to mean ''an item of property which has no physical existence, but which can be enforced by action, literally a 'thing in action'.'' According to him, ''it is clear that debts and the benefit of contracts... are choses in action. Examples of this type of chose in action are debts arising under contracts for the sale of goods or for the supply of power, debts evidenced by bank accounts or debts constituted by loans or bills of exchange''.


Channel J in Torkington v. Magee [1902] 2 K.B. p. 430 defined chose in action to be ''a known legal expression used to describe all personal rights of property which can only be claimed or enforced by action, and not by taking physical possession”.


Thus if X owes Y GH¢100, Y may transfer his right to receive payment to Z who may then enforce the debt against X in a court of law. That is exactly the facts of this present case where the 2nd defendant partly assigned his right to receive payment from the Ghana Highways Authority to the appellant. See: Attorney-General (No. 2) vs. NDK Financial Services Ltd (No.2) [2015-2016] SCGLR 623 where a similar arrangement was held to be enforceable.


These different definitions of 'chose in action' undoubtedly affirm that IPC 11 is a chose in action capable of being assigned or charged as security for a loan. Indeed, in the cross-examination of the appellants' company secretary, she stated that the proceeds of the IPC were assigned by raising the Certificate in the joint names of the appellant and the 2nd defendant. (see page 211 of the Record)


Flowing from the above discussions and definitions, it is our considered view that the debt owed to the 2nd defendant by the Ghana Highway Authority is the 2nd defendant's property, and the Interim Payment Certificate being in the joint names of the 2nd defendant and the Appellant is an encumbrance on the right of the 2nd defendant. IPC 11 was issued in the joint names of the 2nd defendant and the Appellant as an indication that they both had an interest in IPC 11. The assignment of IPC 11 proceeds in this regard constitutes a charge as defined in section 38 of Act 773, and as rightly concluded by the trial judge, was required to be registered by section 25(1) (2) of Act 773.


The appellants' argument that the IPC was only a source for repayment for work done and so does not qualify as a charge or collateral, misconstrues the vital point, which is that as relates to the appellant, the IPC was not a source of repayment for any work done. The liability attached to the IPC is what constitutes it as a charge and consequently to be registered at the Collateral Registry.


Section 25 of Act 773 deals specifically with charges and provides that charges must be registered at the Collateral Registry within twenty-eight days after the date of the creation of the collateral or charge. A charge which is not registered in accordance with subsection (1) is of no effect as security for a borrower's obligations for repayment of the money secured.


We agree that it was wrong to treat IPC 11 as collateral. The terms ‘collateral’ and ‘charge’ have definable objectives and ought not to have been used interchangeably.


However, in spite of the inaccurate use of the term collateral by the trial judge she came to the right conclusion. The substance of the Ruling was that the charge on the proceeds of IPC 11 had not been registered at the Collateral registry in accordance with section 25(3) of Act 773 and accordingly had no legal effect


Ground 2 of the appeal fails and is dismissed.



Grounds 3 and 6 of the appeal relates to the major issue for determination; which is, as between the appellant and the respondent who has a better right to the proceeds of IPC No.11 which was issued by the Ghana Highways Authority in favour of the 2nd defendant?

Two arguments are made by the appellant. First, it is contended that the trial judge erred when she ruled that the respondent had a legal interest by the judgment which had priority over the appellant’s joint/equitable interest in IPC No. 11. The second argument is that the trial judge was wrong in law when she treated the appellant’s interest as equitable under Act 773 when the respondent had not shown any legal interest under the said Act to override the interest of the Appellant.


The thrust of these arguments was that it was incumbent on the respondent to register the consent judgment at the collateral registry. Having failed to do so, it was submitted for appellant that the respondents' interest was also equitable and not legal. In that event, since both interests would be grounded in equity, the appellants' interest would have priority as it was first in time.


From the earlier discussion, it is clear that a charge was created over IPC 11 in favour of the appellant which ought to have been registered, and would have entitled the assignee i.e. the appellant to receive payment out of that particular fund as well as priority and the legal protection of Act 773.


According to Hughes (2006 supra), 'a charge is a creature of equity'', and in equity, all that is required to provide security to a creditor is for the 'chargor' to make it clear that this is its intention, subject to the requirement that the property the subject of the security be adequately defined. Technically therefore, there is nothing like a legal charge. A legal charge may however be created by statute. The charge created by the 2nd defendant and the Appellant which was not registered in accordance with section 25(1) (3) of Act 773 only created an equitable interest as it had no effect as security.


Relying on the definition of a charge in section 38 of Act 773, the Appellant argues that the Respondent also had a responsibility to register the consent judgment at the collateral registry.


It is obvious from the record that the Appellant and the 2nd defendant intended IPC 11 as a charge to secure the credit facility. The Appellant was therefore required to register IPC 11 at the collateral registry but it failed to do this, and in order to escape the effects of its failure, is arguing that the Respondent should also have registered the consent judgment.


The question is; can the consent judgment be said to fall under the category of judgments the law makers intended in the definition of charge?


The Noscitur a sociis canon of interpretation provides that a word is known by the company it keeps. By this rule the meaning of a word found in the group of other words should be determined in line with the meaning of those other words.


The other words found in the definition of ‘charge’ in Act 773 are all ways of creating some kind of interest in property, whether tangible or intangible. It follows that for a judgment to constitute a charge it must seek to create some interest in some property. If the consent judgment 'charged' IPC 11 with the settlement of the 2nd defendant's debt then it could have constituted a charge. However, the consent judgment afforded the respondent various remedies, one of which is by garnishee proceedings.


As rightly argued for the respondent, Act 773 does not apply to the respondents' claim against the 2nd defendant since the claim arose from a sale and purchase transaction which the respondent sought to enforce by way of garnishee proceedings.


Earlier in this judgment, I quoted from sections 1, 2 and 3 of Act 773 which clearly states the types of transactions it applies to. Unlike the appellant whose relationship with the 2nd defendant was lender-borrower, the transaction between the respondent and the 2nd defendant was a sale/purchase agreement which did not require registration as proposed by the Appellant.


Also, I should think that a final judgment of a court of competent jurisdiction in favour of a party settles the rights or the obligations of the parties and is enforceable as a legal right against the losing party. Such a right is superior to an equitable interest which requires the assistance of a court to vindicate.


The trial judge was right in holding that the legal interest of the Respondent took priority over the equitable interest of the Appellant.


Grounds 3 and 6 of the appeal also fail.


Grounds 4 and 5

 Counsel for the respondent raised an objection that these two grounds ought to be struck out as argumentative and contrary to Rule 8(5) of the C.1. 19.


Rule 8(5) of the Court of Appeal Rules, C.I. 19 instructs that a ground of appeal shall not contain arguments or narrations. It provides as follows:

(5) The grounds of appeal shall set out concisely and under distinct heads the grounds on which the appellant intends to rely at the hearing of the appeal without an argument or a narrative and shall be numbered consecutively.


Therefore, where a ground of appeal becomes argumentative, it ceases to be a valid ground of appeal. Ground 5 of the appeal is argumentative and its right place is in the submissions of counsel. The fifth ground of appeal will accordingly be struck out as incompetent.


With respect to the 4th ground, particulars of the “relevant considerations” which the trial judge is alleged to have ignored ought to have been stated to give insight into the nature of the ground of appeal otherwise that ground is vague and general in terms.


Be that as it may, the substance of this ground is that by granting the garnishee order absolute, the trial judge had exercised her discretion wrongly. In the view of appellants' counsel, the trial court ought to have refused to make the order absolute since granting it would be inequitable. The points made in support of this contention are that the judgment which formed the basis of the garnishee proceedings had not been registered in the Collateral registry to create a legal interest. Furthermore, that the trial judge had ignored the joint interest of the appellant in the IPC.


These arguments have been fully considered in my discussion of grounds 2, 3 and 6 of the appeal and I find no need to belabor the points.


I would only add that it is misleading for the appellant to argue that the trial judge had ignored her joint interest in the IPC. In conformity with Order 47 rule 6 of C.I. 47, the trial judge took cognizance of the claim of the appellant. The appellant was dealt with as a third party claiming an interest in the proceeds of the IPC which the respondent was seeking to attach in the garnishee proceedings. The trial judge went into the merits of the respective claims of the appellant and the respondent and held that in so far as the IPC sought to give the appellant a right to the proceeds as a joint beneficiary with the 2nd defendant, it constituted a charge on the proceeds but which had no legal force because of lack of registration.


Thus at the outset of this judgment, I found it necessary to make it clear that the appellant was in reality a “claimant” not a ‘garnishee’. It is apparent that that terminology was used for convenience sake because that is how the appellant had described herself.


Ground 1

Although the general principle of law is that an appeal is by way of rehearing, it is well settled that an Appellant who appeals on a ground that the Judgment is against the weight of evidence has a burden to satisfy the appellate court that the Judgment is indeed unreasonable having regard to the evidence on record. Ampomah vs. Volta River Authority [1989-90] 2 GLR 28.


The appellant has failed to demonstrate any serious lapses or error in the Ruling being appealed that has resulted in a substantial miscarriage of justice.


Section 31(2) of the Courts Act 1993, Act 459 requires an appellate court to dismiss an appeal if it considers that no substantial miscarriage of justice has actually occurred.


For the reasons set out above and save for the little variation to correct the description of the Interim Payment Certificate as a ‘charge’ rather than a ‘collateral’, this Court dismisses the appeal of the garnishee/appellant in totality as devoid of merit.


The Ruling of the trial High Court dated 11th March 2016 is hereby affirmed.