IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT
ACCRA- A.D 2019
AMALGAMATED BANK LTD - (Plaintiff)
ALFERDOS MANUFACTURING & TRADING LTD & 4 OTHERS - (Defendant)
DATE: 14 TH JUNE 2018
SUIT NO: BFS/31/10
JUDGES: JENNIFER DODOO (MRS) JUSTICE OF THE HIGH COURT
E. E ANNAN FOR PLAINTIFF
YAW OPOKU-ADJAYE FOR 4TH DEFENDANT
The Plaintiff claimed against the Defendants jointly and severally, for the recovery of the sum of GH¢991,352.69 being the outstanding balance of an overdraft facility granted to the 1st Defendant together with interest at the rate of 32% per annum from 13th November 2009 till the date of final payment.
Alternatively, the Plaintiff prayed the court for an order of judicial sale of properties situate at No. 115 Kaneshie Housing Estate and Plot No. E180/17 Kotobabi Down belonging to the 4th Defendant as well as 5th Defendant’s property at Sampaman, Mile 9 Winneba Road which had been mortgaged in favour of the Plaintiff. The Plaintiff deposed in its statement of claim that the 1st Defendant was granted an overdraft facility in the sum of GH¢800,000.00 to augment its working capital. This was at an interest rate of 32.75% per annum, a default interest of 1% per annum and an additional penal interest of 6% on the amount which remained unpaid per month when same was due for repayment. The Plaintiff stated that as a condition precedent to the grant of the facility, the 2nd and 3rd Defendants as Managing Director and General Manager, undertook to be jointly and severally liable to the
Plaintiff should the 1st Defendant, a limited liability company fail to honour its obligations.
As further security for the loan, the 4th and 5th Defendants mortgaged their landed properties.
The Defendants all caused Counsel to enter appearance to the suit. It was however only 4th Defendant which delivered a Defence and a Counterclaim. In his Amended Defence and Counterclaim, the 4th Defendant said that he used his property as security for the repayment of a facility of GH¢500,000.00 on 12th February 2007. He contended that this loan was paid off and instead of his property being released, and in the teeth of his protests, the 2nd Defendant took another loan from the Plaintiff using his property as collateral
He also averred that he was desirous of selling his property and the 2nd Defendant had told him he had a business partner who would be willing to purchase it. He said several persons had promised to purchase the house at North Kaneshie which price he had quoted as $1,200,000.00. He therefore asserted that he had suffered loss and damage due to the Plaintiff’s conduct. He therefore put in a counterclaim for the sum of $1,200,000.00 being the sale price of House No. 115 North Kaneshie, Accra together with interest from 2nd October 2008 till the date of final payment. He also prayed for the release of his title deeds on House No. E180/7 Kotobabi, Accra and House No. 115 North Kaneshie, Accra
The issues settled for trial were:
1. Whether or not the loan facility was fraudulently acquired?
2. Whether or not the plaintiff is entitled to its claim?
3. Whether or not the 4th Defendant is entitled to his counterclaim?
Before the trial commenced terms of settlement were entered between the Plaintiff and the 1st and 3rd Defendants. The terms of settlement were as follows:
i. Judgment be entered against the 1st and 3rd Defendants jointly and severally for the recovery of the sum of GH¢2 million as the full and total sum owed by 1st Defendant to the Plaintiff.
ii. Plaintiff shall waive further interest charges on 1st Defendant’s overdraft account with the Plaintiff bank.
iii. The 1st and 3rd Defendants shall pay the Judgment Debt immediately after the date of adoption of the terms by the Court as Judgment in this matter.
iv. If the 1st and 3rd Defendants default in the payment of the Judgment Debt
aforesaid in the manner herein agreed, the entire amount then outstanding at the time of the default shall become immediately due and payable and the Plaintiff shall be at liberty to go into execution for the entire amount then outstanding without leave of the Honourable Court.
These terms were adopted by the Court on 20th July 2016 and entered as Consent Judgment between the Plaintiff on one hand and the 1st and 3rd Defendants on the other hand and the matter between them was deemed settled.
The trial then proceeded with the Plaintiff and the 4th Defendant alone as parties.
The Court will first examine the following issue:
Whether or not the loan facility was fraudulently acquired?
Exhibit A is an offer letter dated 31st October 2008. The facilities listed in the facility letter are an overdraft renewal of GH¢500,000.00 and an overdraft enhancement of GH¢300,000.00. The consolidated overdraft was GH¢800,000.00. The purpose of this loan was to enable 1st Defendant increase stock to meet high demand of goods in the market. Exhibit C is a Deed of Mortgage dated 8th March 2007 executed in favour of the Plaintiff by the 4th Defendant. This was in respect of House No. 115 North Kaneshie Housing Estate.
The facilities for which the 4th Defendant had mortgaged his property was for an overdraft amount of ¢3 billion (old cedis) and an import finance of $200,000.00. These amounts were to support 1st Defendant’s working capital requirements to increase stock and to also facilitate import business. The 4th Defendant has averred in his witness statement that the 2nd Defendant had told him the facility was to be used to produce bio-diesel.
He averred further that the transaction in respect of the facility granted to the 1st Defendant was fraudulent. He particularized the fraud he complained of as:
(a) When on the 12th day of February 2007, Plaintiff agreed to grant banking facilities to the 1st Defendant to import equipment for the production of bio-diesel, it failed to do due diligence or any due diligence at all.
(b) Plaintiff as a reputable bank before approving such a colossal sum for the importation of equipment for the production of bio-diesel which from the invoice did not show the country of manufacture, should have been alerted that the proforma invoice was dubious. The proforma invoice was a sham as it came from a company in Lebanon owned by the wife of the 2nd Defendant.
(c) Plaintiff wrongfully failed and/or refused to do an independent valuation of the machines and went ahead to dispose the facility knowing well the 1st Defendant would not be able to pay so that my properties could be sold and used to repay the loans.
The 4th Defendant tendered in evidence, Exhibit 5 which is a proforma invoice addressed to Green Fuel Biodiesel (Ghana) Ltd. The total cost of the invoice is $4,072,887.30. However, the 4th Defendant had told the court in his witness statement at paragraph 4 as follows:
In the course of my interaction with the 2nd Defendant he persuaded me to use the said property as a security for a facility of GH¢500,000.00 which he was seeking from the Plaintiff.
In cross-examination on 13th April 2017, the following information was elicited from him:
Q: Mr. Kukubor you offered your property situate at North Kaneshie and Kotobabi as collateral for a facility granted by the Plaintiff to the 1st Defendant. Not so?
A: Yes. My Lor
Q: The said facility which was originally in the sum of GH¢500,000.00 was granted in February 2007. Not so?
A: Yes. My Lord.
Q: In October 2008 the said facility was enhanced to GH¢800,000.00
Yes. My Lord.
Q: And upon its enhancement you continued to use your properties as security for the repayment of the facility.
A: Yes. My Lord
Exhibit 4 is a Deed of Guarantee made between 4th Defendant and the 1st Defendant dated 1st January 2009. In that Deed, the 4th Defendant had agreed to release the documents covering his landed properties to cover a financial facility granted to 1st Defendant by the Plaintiff for a period of 1 year. The 4th Defendant has not been able to tell the court the correlation between the Biodiesel Proforma Invoice of over $4 million made out to Green Fuel Bio-Diesel Ltd and the sum of GH¢800,000.00 for which he had put up his property as collateral in favour of the Plaintiff. All the evidence put forth by the Plaintiff was in respect of a facility of GH¢800,000.00.
This facility was to increase the 1st Defendant’s stock-in-trade. Though the Defendant has alluded to fraud in the disbursement of the facility to the 1st Defendant and has given particulars of what he terms the Plaintiff’s lack of due diligence, he had not proven that either the Plaintiff or 1st Defendant was fraudulent. See the case of Dzaisu v. Ghana Breweries Ltd (2007/2008) SCGLR 539 it was held that a bare assertion of a party of his pleadings in the witness box without proof did not shift the evidential burden onto the other party.
In The Republic v. High Court Accra: Ex parte Aryeetey (Ankrah Interested Party)( 2003/2004) SCGLR 398 the court at p. 407 quoted with approval Davy v. Garrett (1877) 7 Ch.D 473 @ 489 thus:
“In the Common Law Courts no rule was more clearly settled than that fraud must be distinctly alleged and as distinctly proved, and that it was not allowable to leave fraud to be inferred from the facts.”
See also the case of Boateng (No. 2) v. Manu (No. 2) (2007/2008) SCGLR 1117 @ 1126 where it was held that a finding of fraud is not to be made without clear and cogent evidence upon the subject. See also Okofoh Estates Ltd v. Modern Signs Ltd (1996/97) SCGLR 224 where the court at p. 255 stated:
“No court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved it vitiates judgments, contracts and all transactions whatsoever.”
The Court has not been able to find as a fact that there were any fraudulent dealings between Plaintiff and 1st Defendant when the former granted the overdraft facility to the latter. In short, the allegations of fraud remain unproven. The next issues are whether or not the Plaintiff is entitled to its claim or the 4th Defendant to its counterclaim?
The 4th Defendant stated in his Amended Statement of Defence at paragraphs 7, 8 and 9 thus:
In further answer to paragraphs 10 and 11, 4th Defendant says that in or about September 30th 2008, he had information that 1st Defendant had repaid the facility and was arranging for a further facility and on October 1st 2008, he quickly wrote a letter to the 2nd Defendant demanding the return of his documents and copied the same to the Plaintiff’s Branch Manager and its legal department.
Upon receipt of the letter the 2nd Defendant held a meeting with the 4th Defendant in his office and pleaded with the 4th Defendant to allow the 1st Defendant as a security for the repayment of the loan but when 4th Defendant was not yielding to the request of the 2nd Defendant, he told 4th Defendant that his partner was arriving from India over the week end of the 30th day of October 2007 and who was going to buy the property so he should sign the documents so that the bank would grant the loan as time was the essence.
4th Defendant says that when the alleged partner did not arrive he wrote a letter to the Branch Manager of the Plaintiff pleading with the Plaintiff not to disburse the facility to the Defendant until all matters relating to the reasons for his consent were resolved.
In cross-examination of Plaintiff’s representative on 28th February 2017, the following information was elicited:
Q: How much loan did the 1st Defendant apply for?
A: 1st Defendant applied for a loan of GH¢500,000.00 and it was later enhanced to GH¢800,000.00.
Q: When was the loan enhanced?
A: It was enhanced in October 2008.
Q: And the original agreement was for GH¢500,000.00. Is that correct?
A: Yes. My Lord.
Q: You have told this Court that the 1st Defendant originally was given a loan of
GH¢500,000.00 and I put it to you that this was the amount of which the 4th Defendant used his property as security for repayment.
A: The initial facility availed to the 1st Defendant was GH¢500,000.00 but it was later enhanced to GH¢800,000.00
Q: I put it to you that the 4th Defendant used his property as security for repayment for the GH¢500,000.00 that was originally loaned to the 1st Defendant.
A: That is not correct.
Q: And the 1st Defendant paid the GH¢500,000.00 loan that was granted to it by the Plaintiff Bank.
A: That is not correct.
Q: When the 1st Defendant had finished payment you agreed to give the 1st Defendant a further loan.
A: That is not correct.
Q: When you enhanced the facility was it not a further loan you gave to 1st Defendant?
A: That is correct.
Q: So you were going to use 4th Defendant’s securities for repayment without his knowledge when you enhanced the facility.
A: That is not correct.
The Plaintiff had 2 Deeds of Mortgage executed in its favour by 4th Defendant on 8th March 2007 involving properties situate at Kaneshie and Kotobabi. These deeds of mortgage were to secure a facility of GH¢500,000.00 afforded to the 1st Defendant. By Exhibit A, the Plaintiff had changed the terms of the agreement by enhancing the facility given to the 1st Defendant. There had been an enhancement of GH¢300,000.00 bringing the consolidated overdraft to an amount of GH¢800,000.00. Did the Plaintiff offer proof that this new development had been brought to 4th Defendant’s attention, and that he had in the light of the new development consented to the continued use of his property as collateral? In the case of Ababio v. Akwasi IV (1994/95) GBR 774 the court said:
The general principle of law is that it is the duty of a Plaintiff to prove his case as he must prove what he alleges. In other words, it is the party who raises in his pleadings an issue essential to the success of his case who assumes the burden of proving it. The burden only shifts to the defence to lead sufficient evidence to tip the scales in his favour when on a particular issue the Plaintiff led some evidence to prove his claim.
There is no indication that the 4th Defendant’s consent had been sought in respect of this enhanced facility at the time it was signed between the parties. While the 4th Defendant had signed a Mortgage tying his property to a loan of GH¢500,000.00 on 8th March 2007, the 1st Defendant had received an enhancement of the facility on 31st October 2008. On 1st October 2008, the 4th Defendant wrote to the 2nd Defendant asking that the 2nd Defendant discontinued the use of his landed properties as collateral with the Plaintiff Bank. In copy of this letter were the Branch Manager and Legal Department of the Plaintiff Bank. (See Exhibit 2).
Thereafter, 4th Defendant caused Exhibit 3 dated 10th November 2008 asking the Plaintiff to put a hold on the loan application until he had sorted out a few issues between himself and 2nd Defendant. It appears that the enhanced facility was disbursed to the 1st Defendant and the 4th Defendant’s had had wind of this state of affairs. He accordingly asked the Plaintiff to put a hold on the loan application.
In spite of this, the Defendant on 1st January 2009 agreed to release his documents to cover the facility for a further period of one year. (See Exhibit 4). By this document and from his evidence in cross-examination, he had signed Exhibit 4 to give postdated consent to his property being used as continuous security for the enhanced facility. However, as already stated, the Plaintiff has settled matters between itself and the 1st and 3rd Defendant. The sum of GH¢2 million was agreed as the full and total sum owed by 1st Defendant to the Plaintiff. In view of the fact that the Plaintiff has settled matters between itself and the primary obligors being the 1st and 3rd Defendant, it cannot continue to hold onto the 4th and 5th Defendant’s title deeds. The court therefore orders that same be released to them. The legal position with regards to the 4th Defendant’s case was that once he had made a counterclaim, he assumed the same onus of proof as the Plaintiff did in making out his claim. See the cases of Malm v. Lutterodt (1963) 1 GLR 1 and Appiah v. Asamoah (2003/2004) SCGLR 226 and Section 11 of the Evidence Act.
The 4th Defendant’s Counterclaim is for:
a. $1.2 million being the sale price of H/No. 115 North Kaneshie, Accra
b. Interest on the said sum from 2nd October 2008 up to date of final payment
c. Return of the title deeds on H/No. 180/7 Kotobabi, Accra and House No. 115 North Kaneshie Housing Estate, Accra.
The 4th Defendant’s claim is for $1.2 million being the sale price of H/No. 115 North Kaneshie, Accra. He stated in his counterclaim that several persons offered to purchase his property and that he had accepted their offers yet could not go through with the sale as the Plaintiff had wrongfully refused to release his title deeds. He did not lead any evidence to show the value of his house. How did the he arrive at this figure when there were no supporting documents to show that this was the current market value figures? Did he have the property valued? And if so, where was the valuation report which would support his claim? In Zabrama v. Segbedi (1991) 2 GLR 221, the court held that the correct proposition of the law was that a person who makes an assertion or averment which is denied by his opponent has the burden to establish that his averment or assertion is true. He does not discharge this burden unless he leads admissible and credible evidence from which the fact(s) he asserts can properly and safely be inferred. This position was re-affirmed in the case of Continental Plastics Ltd v. IMC Industries (2009) SCGLR 298 @ 306-307.
One is also reminded of Blay J.S.C. in Chahin & Sons v. Epope Printing Press  1G.L.R. 163 at 168, S.C. when he said:
They (i.e. the plaintiffs-respondents), merely presented a list of articles they alleged they had lost, fixed prices to them, and without attempting in any way to prove their values, expected the court to award them damages to the tune of the amounts claimed.
So how did he expect the court to make an award in his favour when no evidence existed to prove that he was entitled to the figure which he had claimed? He neither provided a valuation report to support his contention that the market value of the property was $1.2 million nor did he call any other evidence to prove this.
He also did not call evidence in proof of his assertion that he had many people prepared to buy the property but could not go through with the sale due to the Plaintiff’s conduct in holding onto his title deeds. Did he have an agreement with the Plaintiff that he could still go ahead to sell the property although he had put it up as collateral for 1st Defendant’s facility?
The 4th Defendant did not seriously prosecute his counterclaim for the sum of $1.2 million being the sale price of House No. 115 North Kaneshie, Accra and same is consequently dismissed. Since the matter has been settled between the Plaintiff and 1st and 3rd Defendants, the Plaintiff is ordered to release the title deeds of H/No. E180/7 Kotobabi Accra and H/No. 115 North Kaneshie to the 4th Defendant.
For the avoidance of doubt, the Plaintiff would also be precluded from proceeding against the landed properties belonging to 5th Defendant.
The 4th Defendant has brought about this whole situation by giving his up his properties for collateral for a loan when he was not a direct beneficiary. He is wholly to be blamed for his part in this whole transaction.
In view of this, each party is to bear its own costs.
JENNIFER A. DODOO
JUSTICE OF THE HIGH COURT