IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL 5)
ACCRA- A.D 2019
AGRICULTURAL DEV. BANK LIMITED - (Plaintiff)
WEBB BUILDERS LIMITED AND ANOTHER - (Defendant)
DATE: 25 TH JUNE, 2018
SUIT NO: CM/BFS/0874/2016
JUDGES: GEORGE BUADI J HIGH COURT (COMMERCIAL 5) LAW COURT COMPLEX, ACCRA
EZIUCHE NWOSU FOR PLAINTIFF PRESENT
CHRISTOPHER KWAME MEENU FOR DEFENDANTS PRESENT
1.1 Plaintiff is a local banking institution. 1st defendant is a corporate entity and a customer of the bank, whilst 2nd defendant is its managing director, who plaintiff bank claims executed a Contract of Indemnity that guaranteed and secured repayment personally of a loan facility the bank granted 1st defendant, which the bank claims had fallen due and had remained unpaid.
1.2 Plaintiff commenced this suit by a writ of summons on December 14, 2016 initially against 1st defendant. On January 12, 2018, upon leave of the court, plaintiff joined 2nd defendant to the suit, culminating in the amendment of the writ for the following reliefs against defendants jointly and severally:
Recovery of One Million Five Hundred and Forty Nine Thousand Three Hundred and Nine Cedis and Sixty-Five Pesewas. (GH¢1, 549,309.65) being unpaid balance on the loan facility granted the Defendants.
Interest on the above sum at the rate of 33.16% per annum from 7th September, 2014 until the date of final payment.
2.0 Statements of parties’ case
2.1 Plaintiff’s case
Plaintiff’s case is that upon request of 1st defendant for a loan to augment its working capital to complete construction of a project, the plaintiff pursuant to a Facility Offer Letter dated September 17, 2013 granted a short-term loan of GH¢572,315 to 1st defendant. On October 10, 2013, per a resolution of the Board of 1st defendant dated September 7, 2013 accepted the terms and conditions for grant of the facility that included interest rate of 33.16% per annum repayable within 12 months period.
According to plaintiff, 1st defendant had earlier executed a deed titled ‘Assignment of Receivables’ dated August 29, 2011, stamped as LVDN/L7397A/11 by which it assigned to plaintiff its contract proceeds worth GH¢973,377 from the Ghana Education Trust Fund (GETFUND) and to also secure any facility plaintiff may grant to 1st defendant, including interest, legal fees, bank charges, court costs and associated expenses incidental to any legal action that shall be taken by plaintiff towards recovery should 1st defendant default on its part to pay any of its debts to plaintiff. Plaintiff claims that no money has been received from this security till date, and that 1st defendant had failed to retire the facility in spite of several demands though the 12 months duration has expired despite defendant’s acknowledgment demand notices and consequential promises to repay its outstanding indebtedness.
Plaintiff’s case against to 2nd defendant is that he as managing director signed a continuing and unlimited Contract of Indemnity guaranteeing repayment of the loan, binding himself personally to repay the facility including interest, costs charges or other related expenses in the event of default by 1st defendant. Plaintiff says that as at November 10, 2016 defendants’ indebtedness to it stood at GH¢1,549,309.65.
2.2 Defendants’ case
According to 1st defendant, it had been in good business with plaintiff for the past 10 years. It admits applying for the loan; it denies however the terms. It contends that payments of its two major contracts - Achimota SHS Furniture Supply, and St. Vincent COE, Yendi delayed until January 2017, and that proceeds from the above projects were committed to settle its outstanding debt beginning January 2017, which it had communicated to plaintiff. 1st defendant denies any failure, neglect or refusal to pay plaintiff its indebtedness. It contends that it had made substantial payments to settle its debt, but plaintiff had failed to take its payments into account in computing its outstanding indebtedness. Defendant blames plaintiff for the several unsuccessful meetings aimed at re-structuring the loan facility and freezing of interest to enable defendant put its house in order to pay its scheduled monthly payments. 1st defendant denies the claim and contends that plaintiff’s claim for GH¢1,549,309.65 does not reflect its indebtedness to plaintiff.
2.3 2nd defendant admits to have executed personally the guarantee of indemnity. He states however that plaintiff induced him and/or misrepresented to him to sign the document. According to him, first, he did not know to have signed any contract of indemnity as part of securing the loan, and that same was done without his knowledge; second, that he did not understand, and that neither did plaintiff explain to him the legal consequence of the document before signing; and thirdly, that plaintiff did not make him seek independent legal advice before signing. His claim therefore is that plaintiff took advantage of him knowing that he urgently needed the facility to execute government contract award. According to 2nd defendant, there are two or more major GETFUND contracts on-going in which payments for same delayed unduly. He promises that proceeds from contracts shall be committed to settle the true outstanding debt to plaintiff. He contends that the government has still not paid contractors for the GETFUND project, and that he would have settled the loan facility if he had been paid by the Government. He disputes plaintiff’s claim for GH¢1,549,309.65, contending that the amount does not reflect defendants’ true indebtedness.
3 Issues for trial
Following the parties’ inability to settle at the pretrial conference, the pretrial judge set down the following issues for trial:
1. Whether or not the Defendant is indebted to Plaintiff in the sum of GH¢1,549,309.65.
2. Whether or not the repayment of loan together with interest was contingent upon receipt of proceeds from contacts executed by Defendant for the GETFUND.
3. Whether or not there was an agreement between the Parties for Plaintiff to restructure the payment of the facility by Defendant and to freeze payment of interest.
4. Any other issues(s) from the pleadings.
4.0 Assessment of the evidence and the applicable law
4.1 Finding of preliminary facts Correct application of the relevant law to a case, and thus the court’s ultimate decision in the case depends invariably on facts, preliminary and primary that the court correctly finds in the case. Quaye v Mariamu  GLR 93, SC at page 95. See also Domfeh v. Adu [1984-86] 1 GLR 653. Being so, I make the following preliminary findings of facts.
Trial of the suit was conducted per witness statements the parties filed in response to orders the court gave pursuant to Order 38 Rule 3B(2) of the Rules of Court.1 Plaintiff’s evidence in support of its claims was provided in witness statement by Priscilla Segbaya.2 Defendants’ case 1 High Court (Civil Procedure) Rules, 2005 (C.I.47) 2 The Monitoring and Recoveries Officer at the head office of plaintiff was led by 2nd defendant who filed the witness statement for himself and on behalf of 1st defendant. I acknowledge receipt final written addresses the lawyers filed pursuant to a directive of the court.
4.2 Finding of primary facts
For correct application of the relevant law, I now proceed to find and to state primary facts in the case; facts that were admitted on the face of the pleadings, including facts admitted, or which I infer logically to have been admitted, particularly at cross examination. I shall also find and state facts of common ground that are not in dispute, and for which the law requires no proof. Bank of West Africa Ltd v Ackun  1 GLR 176 SC; Kusi & Kusi v Bonsu  SCGLR 60. I shall then proceed to resolve facts in dispute, including as well any other issue or issues apparent on the face of the pleadings but which were not set down by the pretrial court for determination.
4.3 Defendants do not deny grant by the plaintiff of, or receipt thereof of the short term loan facility of GH¢572,315.00 that is contained in the Facility Letter dated 17 September 2013. Exhibit A. Indeed, I find on record that, this had not been the first and only grant from plaintiff. This is because 1st defendant had earlier in 26 August 2011 benefited from a loan facility, which upon default was restructured. Defendants’ claim is that restructuring of the 2011 loan into a short term facility on 17 Sept 2013 evident by Exhibit A was done without their knowledge. On the face of Exhibit A, I shall not believe defendants on this claim, as on page 6 of Exhibit A, 2nd defendant signed and executed acceptance of the facility as managing director of 1st defendant. Besides, on the face of paragraph 20 of defendants witness statement I find that their denial of the restructured loan cannot be truthful.
4.4 I shall resolve firstly defendants’ claim that plaintiff induced 2nd defendant to sign and execute both the loan facility Exhibit A, and the contract of indemnity Exhibit D. The claim is that 2nd defendant did not know, neither did plaintiff made him to know or to seek independent counsel on the implications of Exhibit D prior to signing and executing the document, and that plaintiff took advantage of 2nd defendant. These are serious allegations in the eyes of the law which if sufficiently proven could lead the court to nullify the contract documents.
4.5 I need to say however that in a court of law it is not enough to recite or recount allegations and suspicions of impropriety without supporting them with proofs. Unfortunately, I find on record that the allegations are bare and unproven. The fact is that, plaintiff strongly denies the allegations, and that puts the burden of proof on defendants
The fact also is that defendants had been in working relationship with plaintiff spanning over a decade, and that I reiterate that the impugned facility is not the first one to defendants. As per the records, I find it incorrect defendants’ claim that plaintiff denied them or 2nd defendant’s right to seek independent legal advice on the facility. Indeed, their clause 13b in Exhibits 1 and 2, provide that:
Meanwhile, the Borrower may wish to and ADB recommends that the Borrower seek independent advice in understanding the Loan and the implications of the terms of this Facility Letter.
4.6 Besides, I need to remark here and to find that 2nd defendant’s execution of the loan facility Exhibit A on behalf of 1st defendant is supported by a resolution of approval of its board of directors. See Exhibit B. I observe here that, ‘the assignment of receivables’ Exhibit C predate execution of Exhibit A, whose preamble nonetheless anticipates “consideration of any future banking facilities to be granted to the customer”, which in my view include the facility in Exhibit A.
4.7 With respect to the execution of the contract of indemnity, on the face of Exhibit F, defendants cannot claim that they are not unaware that the document anticipates as well offer of future facilities. Beside all these, 2nd defendant admitted at cross examination that, not only did he sign the document but also that the document contemplates future facilities that could be granted by plaintiff. There is therefore no need for any further proof on the matter. I reiterate here that I fail to see or find any proof of impropriety that impugns the integrity and thus the validity of any of the documents the parties executed over the loan facility, Exhibit A. I have no firm ground to believe, defendants’ single story that seek to impugn the integrity of the documents over the loan facility. I dismiss the claims.
4.8 I need to state here that from the records, 2nd defendant’s liability to plaintiff does not arise from the fact of his being the managing director of 1st defendant at all material time. His liability to plaintiff from the records arises from his execution of contract of indemnity by which he personally guaranteed to repay 2nd defendant’s commitment of obligation under the loan facility to plaintiff.
4.9 2nd defendant is not illiterate to be accorded statutory protection under the s.3 of the Illiterates Protection Act, 1912 (Cap 262). The law is settled that in the absence of requisite evidence to the contrary, a party of full age and understanding would normally be bound by his signature to a document whether he read and understood it or not. Oppong v Anarfi  SCGLR 556, p 558 applied.
5.0 Besides, by the globally acclaimed principle of pacta sunt servanda, the courts uphold the sanctity of contracts. Unless on sufficient proven grounds of fraud, misrepresentation, mistake or undue influence, the courts do not permit parties to deny or impugn representations they have made in a validly executed contractual agreement. Donkor v. Maye Kom Na Mehwe Onyame Assoc [2007- 2008] SCGLR 179; See also Motor Parts Trading Co. v Nunoo  2 GLR 195 SC.
5.1 I find as a fact that the purpose of the loan was “exclusively to augment working capital for the completion of a construction project.” Paragraph 7 of the loan agreement, Exhibit A, provides conditions precedent for grant of the facility, one of which was “[u]ndertaking by the GETFUND to make all payments due to [1st defendant] in the joint names of [1st defendant] and [plaintiff]”. This appears to be the shield, the bunker or refuge of defendants.
5.2 It is fact on record that the GETFUND has not made any payment to the joint names of the parties as provided just above. It is worth stating however that by the terms of the offer, repayment of the facility is not and cannot be based entirely upon or contingent on receipts of payments from the GETFUND as was strongly put out in the defense. This view of mine I believe is supported by paragraph 4 of Exhibit A that provides for “[p]eriod and [r]epayment of the loan” in these words:
4.1 The principal amount of the loan plus interest thereon shall be repaid in full by no later than 6 (six) months from the date of draw down or on receipt of [1st defendant’s] receivables assigned to [plaintiff], whichever comes first; (emphasis added) I hold therefore that it far from the intent on the face of the above provision, indeed inconceivable to interpret the provision to restrict repayment of the loan facility solely to inflows or receivables from the GETFUND as defendants strictly gripped unto.
5.3 Having not denied accessing and using the facility, nor its terms largely, I deem it relevant to state here that the obligation of defendants on the face of the facility, Exhibit A, as well as other documents on record is to repay the loan. For the purposes of responding briefly to the submission of learned counsel for defendants that the purpose of the loan, and thus its payment was contingent on receipts of payment from the GETFUND, which I have earlier found to be incorrect position, I wish to state here on the reliance of Barclays Bank v Sakari [1996- 97] SCGLR 639, at 640 that the purpose for and use of a loan is not a subject matter of primary concern nor the fundamental obligation owed by the borrower to the lender.
5.4 Indeed, the Supreme Court in SG SSB v Hajaara Farms Ltd  1 SCGLR 1, at page 28, held certainly emphasizing its earlier decisions on the same subject matter and held that the obligation of a borrower in a loan contract or transaction as opposed to other types of contracts is to repay the loan, and that the bank has no duty to be embroiled with the performance of the company and the purpose for which the loan was sought and put to.
5.5 I find as a fact that as at 10 November 2016, an amount of GH¢1,549,309.65 was outstanding on the loan facility Exhibit A, details of which include exigible interest were explained in Exhibits D and D1. On the face of Exhibit E, defendants’ current outstanding indebtedness to plaintiff as at February 2018 is GH¢2,442,135.03. Meanwhile, the facility offer Exhibit A, clause 4.1 enjoins repayment in full by not later than six months from the date of the draw down, or upon receipt of receivables defendant assigned to plaintiff, whichever came first.
5.6 Defendants admit under cross examination that the drawdown of the facility was 6 February 2014, and that six months after grant of the facility, the drawdown run out by 5 August 2014, which is the date defendants were to have made full repayment of the facility. Defendant had not made any repayment, neither has any money been received from the receivables from the GETFUND security. I find that as borne by the records on 14 February 2012, 2nd defendant executed Exhibit F by which he personally bound himself by guaranteeing to meet not only 1st defendant obligation on Exhibit A to plaintiff but also future facilities that plaintiff may grant to 1st defendant.
5.7 I need to remark here the importance and relevance of cross examination in our adversarial judicial system. I find that learned counsel succeeded first in putting plaintiff’s case across to defendant. He also succeeded in discrediting, indeed shattering the shield and the refuge in which defendants sought to stoutly hedge themselves. On the contrary, I find plaintiff’s evidence particularly that of 1st defendant’s statement of accounts as on Exhibit D and E were not even a subject of cross examination by learned counsel for defendants. I am thus enjoined to accept the truthfulness of the evidence on the state of defendants’ current indebtedness to plaintiff on Exhibits D and E including interest as having been admitted as the truth that requires no further proof of evidence in support of the fact. Fori v Ayirebi  GLR 627 SC; Quagraine v Adams  GLR 599 CA; PTCH Ltd v Nsafoah  53 GMJ 204, at page 213 (holding 4) CA.
5.8 Defendants admitted at cross examination that they owe plaintiff, falling short however to tell the court how much they owe plaintiff. Defendants also admitted under cross examination that upon request, plaintiff gave out statement of accounts relating to 1st defendant indebtedness. That is Exhibit J, which according to plaintiff contains every information of credits and debits on the facility. i.e GH¢572,315. I make a finding from the records that defendants’ claim of payment of GH¢157,245.00 cannot be with respect to the facility on Exhibit A but one that relates to the earlier facility granted in 2011, which defendants admit was restructured, evident by Exhibit A.
5.9 I make the following findings of fact from the record particularly from evidence of cross examination of 2nd defendant by plaintiff’s lawyer with respect to some of the claims of defendants. It is a fact that the facility under Exhibit A has not been further restructured. Besides, there has not been any concluded agreement to freeze interest on the facility sum. Neither was there any evident proof on record that plaintiff was or had been stifling business operations of 1st defendant.
6.0 I cannot indict plaintiff for facts relating to 1st defendant’s state of credit worthiness defendants are accusing plaintiff to have allegedly put out on the platform of the Credit Reference Bureau. The Credit Reference Bureau is a state office or agency set up to receive and disseminate financial credit data on businesses, the purpose for which is not to stifle businesses but rather to ease the stress businesses go through in accessing loans by providing key information about the state of credit worthiness of a potential borrower, a crucial information that financial institutions need to speed up processes of borrowing. Surely, reflecting its objective, one’s credit reference is going to talk a lot about the person relating to his credit worthiness, and that as long as they reflect true the position, a party cannot be held liable for the conclusions including the spin someone puts on it.
6.1 Besides, I need to restate here that most of the averments in defendant witness statement and their corresponding proofs are not matters of concern to plaintiff. Neither do they answer plaintiff’s claims, i.e. repayment of the loan facility. I reiterate my holdings above, supported by decisions of the Supreme Court I made reference to that, the purpose for and use of a loan facility is not the business or the concern of a lender bank. Theirs is to expect repayment of the loan, all other things being equal. I do not find in context any exception here.
6.2 Requirement of issuance and service of a 30 days’ notice by a lender to a borrower is a statutory demand prior to commencement of action for recovery of the loan grants. s.32, Borrowers and Lenders Act, 2008, (Act 773). By Exhibits G, and F, I find that plaintiff satisfied the statutory demand. I wish to emphasize here that the need for prior 30 days demand notice serves crucial purposes. First, the notice gives the borrower notice possibly reminder of the default on the loan facility. Secondly, the notice informs the borrower of the quantum of its current indebtedness to the lender. Thirdly, and in consequence thereof, the notice affords the borrower the opportunity to raise challenge if any not only of its alleged default of repayment obligations, but also as it happens most often, the state or quantum of its indebtedness to the lender or plaintiff.
6.3 Not only did defendants make no denial that plaintiff’s issued, and served on them the demand notice, they provided no evidence to have challenged plaintiff’s either of the allegation of default of the loan facility or the quantum of their indebtedness on the demand notices. Exhs G and F. Providing no proof or bases of their denials of the quantum of their indebtedness to plaintiff in the face of their admission of having accessed the loan under terms in the agreement, coupled with their implied admission of the statement of accounts that plaintiff presented to them upon request, coupled with their acknowledgment of the demand notices, I hold with ease that plaintiff had succeeded in establishing proof the requisite burden.
6.4 The burden of proof a party assumes in a cause or matter is to introduce sufficient evidence on the issue or issues that was/were set down for determination. The test of satisfactoriness or sufficiency of the evidence is the degree of belief that the party creates in the mind of the trial court concerning the fact or facts in issue. Indeed, at the end of assessment of facts on all the evidence adduced, a reasonable mind should come to conclusion that the existence of a fact in issue is more probable and reasonable than its non-existence. Part II, Burden of Proof, Evidence Act, 1975, (NRCD 323) applied. See also Ababio v Akwasi v. [1994-95] GBR 774; Ackah v Pergah Transport Ltd  SCGLR 728, 731; Faibi v State Hotels Corp.  471 (holding 1). 6.5 Based on findings of facts from my assessment of the evidence on record, and now with respect to the issues set down for trial, I hold that the parties never came to any agreement to make repayment of the loan facility together with interest contingent solely upon receipt of proceeds from contracts executed by defendant for the GETFUND. Neither was there any evident proof of agreement by the parties to restructure repayment of the loan facility Exhibit A, nor freeze payment of interest on the loan amount, the subject matter in this suit.
7.1 Plaintiff’s action succeeds. Let plaintiff enter judgement against defendants jointly and severally for the reliefs endorsed on the writ. On interest, as conceded by plaintiff, and addressed by counsel, the principal sum shall attract interest payment from 10 November 2016, and not 7 September 2014. I allow this correction of what appears to be conflict or inconsistency in reckoning of dates in so far as it is first minor and insignificant, and that secondly, it did not negatively affect defendant.
7.2 Most importantly the correction did not at all contribute, neither was it a factor to the success of plaintiff’s case. The fact is that it rather inured to defendants’ benefit by reducing their level of indebtedness to plaintiff. As was held by the Supreme Court in Efisah v Ansah [2005- 2006] SCGLR 943 held that courts should not allow “minor, immaterial, insignificant, or non-critical inconsistencies [to] be dwelt upon to deny justice to a party who had substantially discharged his or her [legal burden].”
7.3 I have heard the lawyers on the issue of costs. Plaintiff’s lawyer devoted portion of his address on costs. He asks for costs of GH¢50,000, whilst defendant’s lawyer offers GH¢25,000. My view is that this is a matter the parties should have easily settled at the pretrial stage. Having botched or spurned the opportunity to settle, I shall allow the victorious party to exact the full extent of costs it was made to expend in litigating the suit but GH¢50,000 is on the high side. I shall allow plaintiff costs of GH¢30,000 (Thirty Thousand Ghana Cedis).