The plaintiffs by their amended Writ of Summons filed on the 22/02/2016 claim against the defendants jointly and severally as follows:

“1. The sum of GHC355,699.50 (three hundred and fifty thousand, six hundred and ninety-nine Ghana cedis fifty pesewas) which is the sum of money the 1st, 2nd, 3rd and 4th Defendants owed the Plaintiffs as at 22/08/2014 but which they have failed to pay and refused to pay despite repeated demands.

2. Interest on the said sum of GHC 355,699.50 three hundred and fifty thousand, six hundred and ninety-nine Ghana cedis fifty pesewas)as of at 22/08/2014 in subsequent tenure at compound rate of 7.30%

3. General Damages against the 5th Defendants and in favor of the Plaintiffs for recklessly negligently and carelessly failing and refusing to carry out its supervisory role over the 3rd and 4th Defendant and as a result has caused financial loss to the Plaintiff.

4. Legal fees of 15% on the amounts claimed

5. A Declaration that the 4th Defendant is a non-existent phony and fraudulent company but even if it exists same is phony and fraudulent

6. Cost

7. Any further Order(s) the honorable court may deem fit to make.”

All the defendants caused an appearance to be entered on their behalf. The 1st, 3rd and 4th Defendants filed their statements of defense to the claim on 25/02/2015. The 5th Defendant also filed its statements of defense on the 29/06/2015. The 2nd Defendant first filed his statement of defense on 19/02/2015 and on the 22/03/2016 he filed an amended statement of defense.

The 2nd Defendant by his amended statement of defense counterclaimed against the Plaintiffs for:

a) Special Damages

b) General Damages

c) Costs

After an unsuccessful attempt at settlement the following were issues set down for trial by the court:

1. Whether or not noble dream micro finance Ltd carries on business in the purported name of Noble Dream Investment Ltd.

2. Whether or not Noble Dream Micro Finance Ltd and Noble Dream Investment Ltd are separate legal entities.

3. Whether or not Noble Dream micro Finance Ltd is a phony and fraudulent company.

4. Whether or not the veil of incorporation can be lifted to see the actual operators of Noble Dream Investments Ltd.

5. Whether or not the 2nd Defendants (Williams Adom Boateng) is a Director of Noble Dream Investments Ltd.

6. Whether or not the plaintiffs have a cause of action against the 2nd Defendant.

7. Whether or not the plaintiffs ever invested money with Noble Dream Micro Finance Ltd.

8. Whether or not Noble Dream Micro Finance Ltd has suspended its investments operations as at May, 2014.

9. Whether or not the Plaintiffs have ever had any dealings with 1st, 3rd and 4th Defendants.

10. Whether or not the 1st, 2nd, 3rd and 4th Defendants owe the Plaintiffs the sum of GHC 355,699.50 or any part thereof.

11. Whether or not Bank of Ghana was negligent by its failure to supervise the activities of Noble Dream Micro Finance Ltd and Noble Dream Investments Ltd.

12. Whether or not the plaintiffs are entitled to their claims against the Defendants

13. Whether or not the 2nd Defendant is entitled to his counterclaim against the Plaintiffs.

It is observed that per the Court’s records, the 1^st, 3^rd and 4^thdefendants were duly served with hearing notices to attend court for the trial to commence but they failed to show up. This is evidenced by some of the affidavits of service sworn on 12/04/2016 and 12/05/2017. The 1^st, 3^rd and 4^th Defendants also failed to comply with the orders of the court to file their witness statements. The court consequently invoked Order 32 rule 7A of the High Court (Civil Procedure) (Amendment) Rules, 2014, CI 87 and struck out the defence of the 1^st, 3^rd and 4^th Defendants.

With the continuous absence of the 1^st, 3^rd and 4^th Defendants, the court had no option than to proceed with the case under Order 36 rule 1(2) (a) of the High Court (Civil Procedure) Rules 2004, CI 47. It states:

Rule 1(2) where an action is called for trial and a party fails to attend, the trial judge may;

a. Where the plaintiff attends and the defendant fails to attend, dismiss the counterclaim, if any, and allow the plaintiff to prove the claim.

The Plaintiffs’ Case

The plaintiffs’ case as contained in their amended statement of claim filed on 22^nd February, 2016, is that they are husband and wife; and that while the 1^st plaintiff is a lecturer and medical consultant, the 2^ndplaintiff is a businesswoman. It is the case of the plaintiffs that they jointly invested an amount of three hundred thousand Ghana Cedis (GHC300, 000.00) on 20th February, 2014 with the defendant which sometimes is referred to as Noble Dream Financial Services Ltd. The terms of the investment were that the investment was for three months and for a maturity date of 21st May 2014 at an interest rate of 10.50%. The total amount payable at the maturity date was GHS331, 500.00 and the plaintiffs say they reinvested the said amount on that date and expected a return of GHC 355,699.50 on 22^nd August, 2014.

According to the plaintiffs, unknown to them the 3rd and 4th defendants were going through serious financial problems which were never brought to fore by the 5th defendants which is responsible for supervising the 4th defendant. The plaintiffs say that they have made very frantic efforts to get back the money invested with the 4th defendants which operated openly to the full glare of the public but to no avail. They also claim that the 4^th defendant is a phony and non-existent company created by the 1^st and 2^nd defendants under the ambit of the 3^rd defendant to perpetuate fraud on the unsuspecting public including the plaintiffs. They called for the lifting of the veil of the 3^rdand 4^thdefendants companies to enable 1^st and 2^nd defendants to be held liable by the court. They accused the 5^th defendant of negligence for allegedly failing to regulate the 4^th defendant, a non-bank financial institution.

The 2^nd Defendant’s Case

The 2^nd defendant’s case is that he established the 3rd defendant company with the 1^st defendant. However, he has relinquished all his interest in the company since 2011 and has consequently not had any dealing with the 3^rdand 4^thdefendantcompanies since that time. The 2^nd defendant further avers that he had not had any dealings with the plaintiffs whether personally or indirectly, therefore the plaintiffs cannot bring any claim against him.

The 5^th Defendant’s Case

The 5^thdefendant refutes the claims against it by the plaintiffs and contends that as the Central Bank of Ghana it is responsible for regulating banks and non-bank financial institutions in the country and indicates that this duty has been religiously performed in relation to 4^th defendant. The 5^th Defendant further states that its duty does not extend to private contract between individuals and non-banking financial institutions so it cannot be said that it was negligent in the performance of its duties.

The Burden of Proof in Civil Suits Generally

As in all civil suits, the legal burden of proof is placed on the party who asserts the existence of a fact in issue or any relevant fact. Depending on the admissions made, the party on whom the burden of proof lies is enjoined by the provisions of sections 10, 11(4), 12 and 14 of the Evidence Act, 1975 (NRCD 323) to lead cogent evidence such that on the totality of the evidence on record, the court will find that party's version in relation to the rival accounts to be more probable than its non-existence.

Sections 10, 11, 12 and 14 of NRCD 323 provide:

Section 10—Burden of Persuasion Defined.

(1) For the purposes of this Decree, the burden of persuasion means the obligation of a party to establish a requisite degree of belief concerning a fact in the mind of the tribunal of fact or the court.

(2) The burden of persuasion may require a party to raise a reasonable doubt concerning the existence or non-existence of a fact or that he establish the existence or non-existence of a fact by a preponderance of the probabilities or by proof beyond a reasonable doubt.

Section 11—Burden of Producing Evidence Defined.

(1) For the purposes of this Decree, the burden of producing evidence means the obligation of a party to introduce sufficient evidence to avoid a ruling against him on the issue.

(2) In a criminal action the burden of producing evidence, when it is on the prosecution as to any fact which is essential to guilt, requires the prosecution to produce sufficient evidence so that on all the evidence a reasonable mind could find the existence of the fact beyond a reasonable doubt.

(3) In a criminal action the burden of producing evidence, when it is on the accused as to any fact the converse of which is essential to guilt, requires the accused to produce sufficient evidence so that on all the evidence a reasonable mind could have a reasonable doubt as to guilt.

(4) In other circumstances the burden of producing evidence requires a party to produce sufficient evidence so that on all the evidence a reasonable mind could conclude that the existence of the fact was more probable than its non-existence.

Section 12—Proof by a Preponderance of the Probabilities.

(1) Except as otherwise provided by law, the burden of persuasion requires proof by a preponderance of the probabilities.

(2) "Preponderance of the probabilities" means that degree of certainty of belief in the mind of the tribunal of fact or the court by which it is convinced that the existence of a fact is more probable than its non-existence.

Section 14—Allocation of Burden of Persuasion.

Except as otherwise provided by law, unless and until it is shifted a party has the burden of persuasion as to each fact the existence or non-existence of which is essential to the claim or defence he is asserting.

This basic principle of proof in civil suits,isexpounded in Zambrama v Segbedzie (1991) 2 GLR 221 and the same has been applied in numerous cases including Takoradi Floor Mills v Samir Faris (2005/06) SCGLR 882; Continental Plastics Ltd v IMC Industries (2009) SCGLR 298 at pages 306 to 307; Abbey v Antwi (2010) SCGLR 17 at 19 (holding 2); and Ackah v. Pergah Transport Limited and Others [2010] SCGLR 728. In Ackah v. Pergah Transport Limited and Others (supra), Adinyira, JSC succinctly summed up the law, at page 736:

“It is a basic principle of law on evidence that a party who bears the burden of proof is to produce the required evidence of the facts in issue that has the quality of credibility short of which his claim may fail…It is trite law that matters that are capable of proof must be proved by producing sufficient evidence so that, on all the evidence, a reasonable mind could conclude that the existence of a fact is more reasonable than it’s non-existence. This is the requirement of the law on evidence under section 10 (1) and (2) and 11 (1) and (4) of the Evidence Act, 1975 (NRCD 323).”

There is, indeed, a clear distinction between the legal burden of proof and evidential burden of proof. Whilst the legal burden of proof is mostly borne by the plaintiff or whoever makes an assertion, evidential burden exists to produce evidence in support of an assertion or exists in the form of tactical onus to contradict or weaken the evidence that has been led by an adversary. Thus, at the trial the plaintiffs bore the burden of producing evidence and the burden of persuasion on the issues set down for trial. The 2^nddefendant also bore the burden of proof on his counter claim. All the parties were required to lead evidence to establish their claims on the preponderance of probabilities and if one fails the court ought to enter judgment against him. The defendants were also at liberty to introduce evidence to contradict the assertions of the plaintiffs.

Proof of Crimes in Civil Suits

In a civil action, an allegation that a crime has been committed must be proved beyond reasonable doubt. This rule is encapsulated under section 13 (1) of NRCD 323 which provides:

Section 13—Proof of Crime.

(1) In any civil or criminal action the burden of persuasion as to the commission by a party of a crime which is directly in issue requires proof beyond a reasonable doubt.

In Fenuku v John-Teye [2001-2002] SCGLR 985, it was held (in holding 5) that:

“The law regarding proof of forgery or any allegation of a criminal act in a civil trial was governed by section 13(1) of Evidence Decree, 1975 (NRCD 323), which provided that the burden of persuasion required proof beyond reasonable doubt.”

Thus, the evidence led in proof of criminal allegation in a civil trial must be such that the court should be able to convict on that crime if it were trying it in criminal proceedings. The ultimate condition to the application of this rule is that the allegation of crime should be a fact in issue.

Tackling the Issues

I shall now proceed to resolve the issues which have been set down for trial. In the analysis, the court would also consider the written submissions of counsel for the parties. First, issues 1, 2 and 3 would be tackled together since they all centered on the corporate status of the 3^rd and 4^th defendants. Issues 4, 5 and 6 which revolve around the lifting of the veil of incorporation of companies would also be discussed together. Issues 7, 8, 9 and 10 are focused on the plaintiffs’ alleged dealings with the 1st, 2^nd, 3^rd and 4^th defendants through the said investment and their right to recoup the same; consequently, these issues would be assessed together. Issue 11 which focuses on the regulatory role of the Bank of Ghana (BOG), 5^th defendant would then be assessed to ascertain whether the BOG was negligent in regulating the 3^rd and 4^th defendants. Under issue 12, the question of whether the plaintiffs are entitled to their claims would be answered. The court would also determine whether the 2^nd defendant is entitled to his counter claim against the plaintiffs under issue 13.

Corporate Status of the 3^rd and 4^th Defendants

The 1^st, 2^nd and 3^rd issues cannot be answered without examining the procedure for the formation of a company and alteration of a company’s regulation.

A company is formed in Ghana by registration under the Companies Act, 1963 (Act 179). A company is incorporated by the state after the Registrar of Companies is satisfied that the requisite document is registered with it. Registration of a company is said to have occurred when the Regulations of the company are duly registered and a certificate of incorporation is issued by the Registrar of Companies. Section 14(f) of Act 179 provides that:

“The certificate of incorporation, or a copy thereof, certified as correct under the hand of the Registrar, or the Gazette containing the notice referred to in paragraph (e) of this section, shall be conclusive evidence that the company has been duly registered and incorporated under this Code and no proceedings shall be brought in any Court to cancel or annul such registration.”

In Dupaul Wood Treatment v Asare [2005-2006] SCGLR 667 at page 697-698, Sophia Akuffo JSC (as she then was) commented on the relevance of the contents of a regulation as follows:

“[T]he regulations of a company incorporated in Ghana must have certain prescribed form and contents as well as recommended provisions and may be changed in a prescribed manner (see sections 16-22). In the genesis of a company with shares incorporated under the Code (now Act), there are three significant characteristics that, in my view, may be likened to the genetic markers (DNA). These are the names of the first directors of the company{ sections 16 (2)(D) and 181 (2)); the number of shares of no par value with which the company is to be registered (section 16 (4) and 40 (1)); and the signature and names of subscribers to the regulations (as well as the number of shares each is taking and the amount of the consideration payable in cash in respect of such shares) duly attested by at least one witness. These are pieces of information that must appear in the regulations in order to be registrable.”

A company limited by shares requires in addition to a certificate of incorporation, a certificate to commence business before it can transact any business, exercise any borrowing powers or incur any indebtedness. The certificate to commence business is only issued when first, certain particulars of the company are delivered to the Registrar of Companies by way of a return in duplicate in compliance with section 27 of Act 179. These particulars include: the name of the company; its authorised business; the names and any former names of the company, addresses and business occupations of its directors and secretary, and particulars of any other directorships held by them; the name and address of its auditor; the addresses of its registered office and principal place of business in Ghana and the number of the post office Box of its registered office; and if the company has shares, the amount of its stated capital as well as the number of its authorised shares of each class of shareholders.

Second, the company must deliver to the Registrar for registration a declaration in prescribed form verifying that payments have been received by the company in relation to the minimum capital requirement under section 28 of Act 179. Thus, it is only when the required particulars of the company have been filed and the minimum capital requirement has also been met that the Registrar of Companies shall issue the company limited by shares a certificate to commence business. I therefore agree with counsel for the plaintiffs that the mere fact that a company limited by shares has been incorporated does not mean it can immediately commence business to make profit. Indeed, it has to comply with sections 27 and 28 of Act 179 and failure to do so constitute a fundamental breach that affects the legal status of the company. The plaintiffs’ fundamental complaint is summed up in the words of their learned counsel at page 7 of his written address as follows:

“My Lord in the Plaintiffs’ contemplation, Noble Dream Micro Finance Ltd is not separate from Noble Dream Investment Ltd and that they were both operated in a manner that the unsuspecting public would by their activities see them as one entity.

It has my Lord, always been the plaintiffs’ case that the 3^rd and 4^th Defendant were one and the same entity though they were handled separately and were being operated by 1^st an 2^nd Defendants …”

Learned counsel for the plaintiffs relied heavily on Exhibits ‘A’ and ‘WAB 3’ i.e. the responses to a search conducted on the 4th defendant, Noble Dream Micro Finance Limited from the Registrar-General’s Department and concluded that the 4^th defendant carries on business in the purported name of the 3^rd defendant, Noble Dream Investment Limited. Counsel for the 2^nd defendant on the other hand submitted that the name of the 3^rd defendant company changed to the 4^th defendant, Noble Dream Micro Finance Limited.

For the sake of brevity, the contents of Exhibits ‘A’ and ‘WAB 3’ which appear on the letterhead of the Registrar-General’s Department are reproduced below.

Exhibit A states:

“8TH DECEMBER, 2014

ADANSIMAN CHAMBERS

KUMASI

Dear Sir/ Madam

RE: SEARCH ON NOBLE DREAM MICRO FINANCE LIMITED

We refer to your letter dated 10th October 2014 in relation to the above named company search conducted as per computer data as follows:

DIRECTORS:                                   NATIONALITY

1. OWUSU AFRIYIE EZEKIEL          GHANAIAN

2. WILLIAMS ADOM BOATENG       GHANAIAN

SECRETARY:

OWUSU AFRIYIE EZEKIEL

SHAREHOLDERS ADDRESS NUMBER OF SHARES

NUMBER OF SHARES

OWUSU AFRIYIE EZEKIEL – HNO.PLT 42BLK.X.SUAME MAAKRO - 30,000

WILIAMS ADOM BOATENG – HNO. PLT 39 BLK.B.TAFO ANYARNO KSI –

30,000 OBJECTIVES: MICRO FINANCE,

PROJECT FINANCING,

FINANCIAL MANAGEMENT AND TRAINING SERVICES

SMALL AND MEDIUM ENTERPRISE FINANCE CREDIT AND LEASING SERVICES

REGISTERED OFFICE:

P.O. BOX KJ. 12 KEJETIA KUMASI

G.P.R.T.U BUILDING FIRST FLOOR AGONA AGIGYA SEKYERE ASHANTI.

Yours faithfully,

SIGN

VICTORIA AYITSOO AYESU (MRS)

HEAD OF RECORDS

FOR: REGISTRAR OF COMPANIES”

Exhibit WAB 3 also states as follows:

“5TH NOVEMBER, 2015

TOTOE LEGAL SERVICES

P.O.BOX 865

KUMASI

Dear Sir,

RE- SEARCH ON NOBLE DREAM MICROFINANCE LIMITED

We refer to your letter dated 3rd November, 2015 in relation to the above named company.

Search conducted on our records revealed the following:

Incorporation Certificate Date: 7th October 2009

Commencement Certificate Date: 8th October 2009

DIRECTORS

OWUSU AFRIYIE EZEKIEL (GHANAIAN)

AUGUSTINA ADOMAKO (GHANAIAN)

SECRETARY

 OWUSU AFRIYIE EZEKIEL

SHAREHOLDERS NO. OF SHARE HELD

OWUSU AFRIYIE EZEKIEL                             11,200,000

AUGUSTINA ADOMAKO                                 2,800,000

The name of the said company was changed from NOBLE DREAM INVESTMENT LIMITED to NOBLE DREAM MICROFINANCE LIMITED.

Therefore NOBLE DREAM MICROFINANCE exists as an entity on our records.

Attach is the certified true copy of the said company’s profile.

Yours faithfully,

SIGN

VINCENT DARKU

ASST. CHIEF EXECUTIVE OFFICER (RECORDS)

FOR: AG. REGISTRAR OF COMPANIES”

Attached to Exhibit ‘WAB 3’ is the profile of the 4^th defendant company. This document was also tendered in evidence by the 2^nd defendant and marked Exhibit ‘WAB 4’. I have perused Exhibits ‘A’, ‘WAB 3’ and ‘WAB 4’ and it is my considered opinion that to trace the history of the 3^rd and 4^th defendant companies and to ultimately determine their standing, it is important to read the exhibits together as a whole. This is because exhibit ‘A’ does not even give all the relevant information relating to the company whose particulars it sought to produce. For instance, the date of incorporation and the date of commencement of business were not provided in the report.

Exhibit ‘A’, however, confirms the fact that the 3^rd defendant company was once upon a time registered with the 1^st and 2^nd defendants as directors and shareholders.

On the other hand, exhibit ‘WAB 3’ makes it clear that the 4^th defendant company exists and that the name of the 3^rd defendant company was changed to the 4^th defendant company. Exhibit WAB 4 titled Re-Registration Profile also provides the New Company Details as well as the Old Company Details of the 4^th defendant company. It is observed from the documents that the regulations of the company which was incorporated on 7^th October, 2009 were altered – the company’s name, names of directors and the shareholding were all changed. Section 22 of Act 179 regulates the overall process for altering the regulations of companies. For alteration of any of the contents of a regulation, consent of members of the company by way of special resolution is required. This is subject to other requirements depending on the subject of the amendment. For instance, in addition to the special resolution, change in name of a company can only be effected with the consent of the Registrar in accordance with section 15 of Act 179.

It cannot be gainsaid that the Registrar of Companies must have been satisfied with the process relating to the alteration of the regulation before effecting the changes in the company’s profile. It is the law that any official act shall be entitled to a presumption of correctness and shall not be disturbed unless the act was procured by fraud or mistake. This is one of the rebuttable presumptions provided for in section 37(1) of NRCD 323 as follows:“It is presumed that official duty has been regularly performed.” In considering the presumption of the regularity of official acts, the Wisconsin Supreme Court in the 1926 case of Netherton v. Frank Holton & Co., 189 Wis. 461, 463, 205 N.W. 388 (1926) which involved the date of entry of a judgment by the clerk of the trial court, the Supreme Court said that the presumption of regularity of official acts is "only a presumption which fails when rebutted by clear and satisfactory proof." In Mate Kole and Azago Kwesitsu I v. Electoral Commission & Attorney-General (Teye Titriku I and Akuse-Amedeka Citizens Association) (No. 2) [2012] 1 SCGLR 244 where the issue as to whether a legislative instrument regularly made was valid came up for determination; the Supreme Court applied the presumption of correctness thus:

“Having declared the version of L.I. 1983 which is therein stated to have come into force on 24^th November 2010 null and void, it follows that the other version which we accept as the earlier or original version of L.I. 1983 as procedurally valid, enjoys in all other respects, the presumption of regularity.”

To rebut the presumption, the plaintiffs must prove that the said alteration was invalid and the search reports particularly exhibits WAB ‘3’ and WAB ‘4’ were issued erroneously or procured by fraud. There was indeed an attempt by the plaintiffs to do. The following transpired at page 22 of the record of proceedings during the cross examination of the 2^nd defendant by counsel for the plaintiffs:

Q: Can you tell the Court when the search was conducted?

A: I sent a letter to the Registrar General’s office requesting for the Directors of Noble Dream in November 2015.

Q: The result of the search is dated 5th November, 2015 is that correct?

A: Yes.

Q: Your search is signed by an Assistant Chief Executive Officer (Records)?

A: Yes.

Q: Take a look at Exhibit A. Can you read from Exhibit A the date of the search?

A: 8th December, 2014.

Q: And in that one Exhibit A is signed by the Head of Records?

A: Yes.

Q: I am suggesting to you that Exhibit WAB3 is fraudulent?

A: No.

Q: And you procured it fraudulently

A: No. I went through the proper means to procure same and I have receipts to that effect.

It is apparent that the 2^nd defendant was resolute in his defence of the credibility of exhibit WAB ‘3’ and by extension exhibit WAB ‘4’. From the record, apart from the bare assertion that exhibit WAB ‘3’ was fraudulently procured, the plaintiffs did not lead any cogent evidence to prove the allegation. They alleged fraud but failed to discharge the legal burden of proof on the issue. It is my considered opinion that the authenticity of exhibits ‘A’, WAB ‘3’ and WAB ‘4’ as official documents is not in doubt, which is why they were admitted in evidence without any objection. More so, exhibit WAB ‘4’, the Re-registration Profile is a copy of a writing in official custody and therefore in the absence of any evidence to the contrary the same is presumed to be genuine. Section 162 of the Evidence Act, 1975 (NRCD 323) provides:

“Section 162—Copies of Writings in Official Custody.

A copy of a writing is presumed to be genuine if it purports to be a copy of a writing which is authorised by law to be recorded or filed and has in fact been recorded or filed in an office of a public entity or which is a public record, report, statement or data compilation if—

(a) an original or an original record is in an office of a public entity where items of that nature are regularly kept; and

(b) the copy is certified to be correct by the custodian or other person authorised to make the certification, provided that the certification must be authenticated.”

From the foregoing, I make a finding of fact that the 3^rd defendant company was incorporated on 7^th October, 2009 with the 1^st and 2^nd defendants as the first directors and shareholders. Subsequently, the regulation of the company was altered and the name of the company was changed from the 3^rd defendant company, Noble Dream Investment Limited to the 4^th defendant company, Noble Dream Micro Finance Limited. The directors and shareholders also changed. One Augustina Adomako replaced the 2^nd defendant, Williams Adom Boateng as a director of the company. Per the alteration, the 1^st defendant and the said Augustina Adomako became the shareholders of the company. Exhibit WAB ‘1’, the Deed of Transfer document corroborates in material particular that the 2^nd defendant’s shares in Noble Dream Investment Limited was transferred to the 1^st defendant on 17^th October, 2011. I also make a finding of fact that the two company names never existed at the same time and there is no evidence to suggest that the two names were used to perpetuate fraud. By plaintiffs’ own showing they only dealt with the 4^th defendant company – they had nothing to do with the 3^rd defendant company.

Thus, in answer to issue 1: I hold that Noble Dream Micro Finance Limited does not carry on business in the purported name of Noble Dream Investment Limited. By operation of law the name Noble Dream Investment Limited became extinct when it was changed to Noble Dream Micro Finance Limited. For now, its relevance is confined to the history of Noble Dream Micro Finance Limited. I also hold that insofar as the 3^rd defendant company’s name was changed to the 4^th defendant company; there is only one legal entity in the 4^th defendant.

From the foregoing, as to whether or not the 4^th defendant is a phony and fraudulent company as posed in issue 3, the simple answer is “No”.

Lifting the Veil of Incorporation

A limited liability company formed and registered under the Laws of Ghana is a legal entity distinct from its members. Hence it is capable of enjoying rights and of being subject to duties which are not the same as those enjoyed or borne by its members i.e. the shareholders, directors and officers of the company. This fundamental principle of corporate personality and its distinctiveness from its members was first espoused in the celebrated case of Salomon v Salomon [1897] AC 22 where Lord Macnaghten held:

"The company is at law a different person altogether from the [shareholders]...; and, though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands received the profits, the company is not in law the agent of the [shareholders] or trustees for them. Nor are the [shareholders], as members liable in any shape or form, except to the extent and in the manner provided by the Act."

This position of the law is captured in section 24 of the Companies Act, 1963 (Act 179) which provides as follows:

‘‘Except to the extent that a Company's Regulations otherwise provide, a company registered after the commencement of this Act and an existing company which, pursuant to section 19, adopts Regulations in lieu of its memorandum and articles of association shall have, for the furtherance of its objects and of a business carried on by it and authorised in its Regulations, all the powers of a natural person of full capacity.’’

The provisions of Section 24 of the Companies Act have been applied in numerous cases including Morkor v Kuma [1998 - 99] SCGLR 620 where the Supreme Court held at page 632 per Sophia Akuffo JSC as follows:

"Save as otherwise restricted by its regulations, a company, after its registration, has all the powers of a natural person of full capacity to pursue its authorised business. In this capacity, a company is a corporate being, which, within the bounds of the Companies Code, 1963 (Act 179) and the regulations of the Company, may do everything that a natural person might do. In its own name, it can sue and be sued and it can owe and be owed legal liabilities. A company is, thus, a legal entity with a capacity separate, independent and distinct from the persons constituting it or employed by it. From the time the House of Lords clarified this cardinal principle more than a century ago in the celebrated case of Salomon v Salomon & Co. [1897] AC 22, it has, subject to certain exceptions remained the same in all common law countries and is the foundation on which our Companies Code, 1963 is grounded."

From the foregoing, it is clear that a company upon incorporation is a separate and distinct entity from its shareholders, directors and officers, and the Courts will seldom attach personal liability to such shareholders, directors and officers whose acts are the acts of the company except in very limited circumstances. There is a figurative veil that separates and distinguishes the company from the afore-named persons who may be behind it or who may control it. The corporate veil may be lifted to hold these persons and related companies liable for their actions albeit done in the name of the company. The court may only lift the corporate veil under certain circumstances. For instance, courts have lifted the veil of incorporation where a company is a sham designed to commit fraud or avoid an existing contractual obligation. In Morkor v Kuma (supra) at page 632, it was held:

“The corporate barrier between the company and the persons who constitute or run it may be breached only under certain circumstance. These circumstances may be generally characterized as those situations where, in the light of evidence, the dictates of justice, public policy or the Companies (Act) itself so requires. It is impossible to formulate an exhaustive list of the circumstances that will justify a lifting of corporate veil. However, the authorities indicate that such circumstances include where it is shown that the company was established to further fraudulent activities or to avoid contractual liabilities.”

It is the plaintiffs’ case that the 1^st and 2^nd defendants are the alter egos of the 3^rd and 4^th defendants companies and that the companies were formed to perpetrate fraud on the unsuspecting public including the plaintiffs. They have, therefore, invited the court to lift the veil of incorporation to hold the 1^st and 2^nd defendants liable for the alleged infractions of the companies. In their amended statement of claim, the plaintiffs particularised the allegations of fraud as follows:

“a) Knowing that the 3rd Defendant carries out improper business practice, yet promoting its set up and encouraging its existence and improper conduct to the detriment of the Plaintiffs.

b) Without believing in the status and conduct of the 3^rd Defendant in promoting its object; yet, setting it up to dupe unsuspecting members of the Ghanaian Public; more so, the Plaintiffs with the connivance of the 5th Defendant in manner that is careless and reckless but without caring about the same.

c) Setting up investments Companies: the 3rd and 4th Defendants; if the latter exists for the benefits of investors, the Plaintiffs included, knowing very well that the money invested and yielded thereof would not be paid.

d) Using unlawful mans to obtain a material advantage to the detriment of the Plaintiffs

e) Giving the 4th Defendants different names;

I.NOBLE DREAM FINANCIAL SERVICES

II. NOBLE DREAM MICROFINANCE LIMITED

And their Ahodwo set up has different status

I.A branch

II. Head Office

Knowing that its main aim is to deceive and to cause confusion in the minds of the Plaintiffs and the unsuspecting Public so that it would not pay them of their investments.”

Fraud involves misappropriation of assets or a misrepresentation of financial or other relevant information. It also involves fictitious trading and outright theft. A causal link exists between conflict of interest and fraud. A conflict of interest situation can be used to dishonestly appropriate the assets of a company or its customers. At the heart of these allegations of fraud is the 4^th defendant’s grant of GHC 300,000 to Eden Micro Finance as a loan facility. The 2^nd defendant was the Executive Chairman of the Eden Group, the parent company of Eden Micro Finance. This act has inspired the charge of conflict of interest against the 2^nd defendant. Counsel for the plaintiffs stated at page 21 of his written submission as follows:

“Further exhibit BOG “1” at page 3 indicated that the 4th defendant has granted a loan of GHC 3000,000 to Eden Micro Finance which was part of Eden Group which had its Executive Board Chairman as the 2nd Defendant. This information is corroborated by exhibit H.

The question is how did Eden Group get to know that it could get such an amount from the 3rd and 4th Defendant? The simple answer is the 2nd Defendant was abusing privilege information and got himself into a conflict of interest situation. This further led the 3rd and 4th Defendant outwitting the public in terms of deposit made by the public to same. It is our humble submission that the 3rd and 4th Defendants are bent on overreaching the public. The veil of incorporation should be lifted to enable the plaintiffs go after the real person who are using the 3rd and 4th Defendants as a charade or façade to overreach them of money properly theirs.”

Conflict of interest is defined by Black’s Law Dictionary, 8th edition as a real or seeming incompatibility between one’s private interests and one’s public or fiduciary duties. Some key elements can be inferred from the definition of conflict of interest: First, there is a private or personal interest. This is often a financial interest, but it could also be another form of interest, say, to provide a special advantage to a spouse or crony. There is nothing wrong with the pursuit of private or personal interests but the problem arises when this private interest comes into conflict with an official or fiduciary duty. As a professional, one takes on certain responsibilities, by which one acquires obligations to clients, employers, or others. These obligations are supposed to trump private or personal interests.

Ghana’s Companies Act sought to define the scope of personal conflict of interest in the regulation of directors’ duties. It stipulates that a director shall not, without the consent of the company in accordance with section 206, place himself in a position in which his duty to the company conflicts or may conflict with his personal interests or his duties to other persons (section 205). The Act further stipulates that without the consent of the company, a director shall not use the money or property of the company or confidential information or special knowledge obtained by the director in the capacity of director for his own advantage; be interested directly or indirectly, otherwise than merely as a shareholder or debenture holder in a public company, in a business which competes with that of the company; or be personally interested, directly or indirectly, in a contract or any other transaction entered into by the company except as provided by section 207. Directors as agents of the company are in a fiduciary relationship with the company and the broader stakeholders of the company including shareholders, customers and the community at large.

The term fiduciary duty is derived from the Latin phrase fide et fiducia, which means “by faith and confidence”. In Bristol and West Building Society v Mothew [1998] CH 1, 18, Millet L.J defined fiduciary duty as follows:

“A fiduciary is someone who acts for and on behalf of another in a way that give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary … he is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary.”

The fiduciary duties of a director may be summed up as follows: a director must act in good faith; a director must not make a profit out of his trust; and he must not place himself in a conflict of interest situation. Setting up a rival company by a director to compete with the main company without the consent of members of the second named company is a classic case of conflict of interest. In Asafu-Adjaye v Agyekum [1984-86] 1 GLR 382 at page 397, Osei-Hwere JA (as he then was) delivering the judgment of the court said:

“The respondent is not a mere dormant or cosmetic director. He is an executive director who has contributed his skill and expert knowledge with those of the first appellant to promote the purposes of the business for which the seventh appellant company was formed. It is, in our view, the apogee of breach of trust for the respondent to set up a rival company unknown to the seventh appellant.”

Indeed, the conflict of interest violation is more egregious if a director uses the funds of his company to advance the cause of his private interest without full disclosure and consent of his company. In the instant case, however, the 2^nd defendant had no interest whatsoever in the 4^th defendant company when the loan facility was advanced to Eden Micro Finance. He transferred his shares in the 3^rd defendant company, Noble Dream Investment Limited (as evidenced by exhibit WAB ‘1’) before the name of the company was changed to the 4^th defendant company, Noble Dream Micro Finance Limited. Again, per the Registrar-General’s records, the 1^st defendant and Augustina Adomako are the directors and shareholders of the 4^th defendant company. In effect, it can be concluded that by no stretch of imagination can the 2^nd defendant be held liable for the business decision of the 4^th defendant company.

Key among the allegations of fraud against the 1^st and 2^nd defendants is the charge that the 4^th defendant company used different names i.e. Noble Dreams Financial Services and Noble Dream Micro Finance Limited. This allegation is borne out of exhibit K1 i.e. Pay-in-Slip and exhibit K2 i.e. statement depicting details of the plaintiffs’ investment. The use of Noble Dream Financial Services’ pay-in-slip and stamp on exhibit K2 were untidy processes as the plaintiffs were not dealing with that entity. We should, however, not lose sight of the fact that the plaintiffs were eventually issued with exhibit K2 which could aptly be described as the investment certificate. This is the primary document that shows that the plaintiffs invested with the 4^th defendant company. The investment certificate bears the name and logo of Noble Dreams Micro Finance Limited. It is my considered opinion that the plaintiffs could not prove beyond reasonable doubt that the pay-in-slip and the stamp depicting the name Noble Dream Financial Services were fraudulent acts. I therefore consider them as administrative lapses.

The plaintiffs also went to town on the disparity relating to the address of the 4^th defendant’s registered office and the location address of its head office. From exhibit WAB4, the following address was registered as the principal place of business as well as the registered address: GPRTU Building Agona, First Floor, Agona Afigya Sekyere, Afigya-Kwabre, Ashanti. The postal address of the principal place of business, registered address and other place of business was registered as: P.O. BOX 1900, KUMASI, A/R, Ghana. Perhaps for the sake of clarity, the postal address of business was registered as:

GPRTU Building Agona

First Floor,

Agona Afigya Sekyere

Afigya-Kwabre

Ashanti

P.O. BOX 1900 KUMASI, A/R, Ghana

The plaintiffs’ query is that the head office of the 4^th defendant company was located at the Former Mr. Biggs, Ahodwo High Street, Kumasi. This, per the plaintiffs charge was part of the ploy designed to mislead and defraud the unsuspecting public. There is a distinction between the registered office of a company and the principal place of business. The registered office or registered address of a company is a physical office where the company receives service of documents from the Registrar of Companies and other regulators; and in case of law suits, the company receives notices or services of process. The principal place of business is also referred to as the corporate office or the head office of the company.

This office is most often the hub of the company. Mostly, this is where the executives and other officers of the companies maintain their offices. This is where operational activities take place – where customers and suppliers among others interact with officers of the company. It is apparent from the record that the head office address: Former Mr. Biggs, Ahodwo High Street, Kumasi does not reflect the particulars of the 4^th defendant company which was registered by the Registrar-General. The 4^thdefendant failed or refused to amend its record at the Registrar-General’s when it decided to use the Ahodwo High Street location as its principal place of business. This is indeed an irregularity but in the absence of any cogent evidence, it will be going too far to read criminality into it. After all, the 4^th defendant provided the Ahodwo address as its corporate office location to the Bank of Ghana who issued the company the license to operate as a non-bank financial institution on 28^th March, 2013, as evidenced in exhibit BOG1. For me, this act raises reasonable doubt in respect of any criminal intent on the part of the managers and controllers of the 4^th defendant company.

All in all, the plaintiffs failed to prove beyond reasonable doubt that the 1^st and 2^nd defendants established the 3^rd and 4^th defendants with the aim of defrauding the unsuspecting public and succeeded in defrauding the plaintiffs. Consequently, the veil of incorporation cannot be lifted to ascribe any liability to the 1^st and 2^nd defendants. It is also clear from the foregoing that the 2^nd defendant was a director of the 3^rddefendant company and since he transferred his shares in the company and coupled with the fact that the company is no longer in existence, he cannot be described as a director. In view of this, can it be said that there a cause of action against the 2^nd defendant?

The question of whether a cause of action exists against a party was explained in the case of Ampratwum Manufacturing Co. Ltd. v Divestiture Implementation Committee [2009] SCGLR 629 at 298 by the Supreme Court per Baffoe-Bonnie JSC as follows:

“It is fundamental in litigation that parties must commence action against relevant parties to the suit. To institute an action against a party, one must have a cause of action against that party. Thus in the case of Letang v Cooper (1965) 1 QB 232, CA Lord Diplock rightly in our respectful view said:

“A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another.”

It is worthy of note that the defendant-respondent has from the onset contested the propriety of being made a party in this case.”

It is palpably clear from the record that the 2^nd defendant is not a director of the 4^th defendant company neither has he ever been involved in the management and control of the company when the name was changed to the 4^th defendant. It therefore, follows that he cannot be held liable for any act involving the 4^th defendant company. In view of this, I agree with counsel for the 2^nd defendant when he stated that:

“The records have shown who the shareholders and directors of Noble Dream Finance are. The 5th defendant’s representative in his evidence went ahead to name the directors and shareholders. THE PLAINTIFFS COULD HAVE CONDUCTED THEIR SEARCH AT THE 5TH DEFENDANT BEFORE INSTITUTING THE INSTANT ACTION AND KNOWN WHOM TO SUE. ALSO THE PLAINTIFF COULD HAVE TAKEN ADVANTAGE OF THIS SUIT TO HAVE FILED AND SERVED INTERROGATORIES ON THE 5TH DEFENDANT TO DISCLOSE THE NAMES OF THOSE BEHIND THE 4TH DEFENDANT IN THIS COURT. If they had done so they would not have embarked on the instant reckless course against the 2nd Defendant who has had nothing to do with the 4th Defendant.”

Consequently, in answer to issue 6: there is no cause of action against the 2^nd defendant.

Issues 7, 8, 9 and 10

Before I tackle issues 7, 8, 9 and 10, I would take the liberty to delivered myself on a point of law bordering on admissions. By page 38 of the written submission filed by counsel for the plaintiffs, he submitted as follows:

“In the present case my Lord, the Plaintiffs made some allegation against the 1st, 3rd and 4th Defendants. The matter proceeded to full trial and no authority or force gagged or prevented the 1st, 3rd and 4th Defendants from participating in the trial neither was there any attempt to do so. The 1st, 3rd and 4th Defendants had free and unfettered access to the court to contest the assertions made against them but they chose to stay away from contesting the allegations. The net effect imply is that they have admitted all the allegations against them. In the premises can safely enter judgment against them in respect of the claims being made by the Plaintiffs against the 1st, 3rd and 4th Defendants.”

By the above submission, counsel was urging on the court to enter judgment against the 1st, 3rd and 4th defendants based on admissions which could be implied by their failure to attend the full trial and contest the said allegations. When facts that can sustain the case of a party to a suit are admitted by the other party, trial of that case may become unnecessary provided that such admissions are unequivocal and voluntary. In that regard judgment may be entered on the basis of the admissions. The defence may expressly admit a fact pleaded in a statement of claim or impliedly admit it by failing to traverse it. Also, if there is a default in filing an appearance or statement of defence, they constitute implied admission and judgment may be entered against the defendant. However, in instances where a defendant’s statement of defence is struck out at the trial stage, judgment cannot be entered against the defendant without hearing the evidence. Thus, once there is a full trial the legal burden of proof is not dispensed with in spite of the implied admission by the defendant for failing to contest the matter. In the instant case, the plaintiff continued to bear the burden proof in respect of the claims against the 1^st, 3^rd and 4^th defendants.

I have looked at exhibit K 2 which I aptly described as the investment certificate. It gives the Details of Investment made by the plaintiffs with the 4^th defendant company. The document bears the name and logo of Noble Dream Micro Finance Limited, the 4^th defendant company. From the document, the names of the investment interest holders are Charles Poku and Mrs Shiela Poku i.e. 1^st and 2^nd plaintiff respectively. The date of investment and reference number are 21^st May, 2014 and 10-010106735-01 respectively. The invested amount is also given as GHC 331,000.00 and this confirms plaintiffs story that this amount was reinvested after an amount of GHC 300,000.00 which had been invested with the 4^th defendant company on 20^th February, 2014 matured on 21^st May, 2014. The document also gives the interest rate per tenure of the investment as 7.30% and the sum total of the said interest rate as GHC 24,199.50. Also, per the document the period of investment is for 3 months and the total payable amount of GHC 355,699.50 was due on22^nd August, 2014. The document was endorsed by the signatures of officers of the 4^th defendant company. One of the plaintiffs also signed the document section.

There is no piece of evidence on record that controverts exhibit K 2. I find the document to be credible.

It provides an incontrovertible evidence that the plaintiffs invested with the 4^th defendant company. It is also apparent from the record that the 4^th defendant had not suspended its operations as at May, 2014. This is because the investment transaction in dispute was made on 21^st May, 2014. As far as the evidence on record is concerned, the 1^st defendant was a director of the 4^th defendant company when the plaintiffs entered into the investment transaction with the company on 21^st May, 2014.

In fact, he (1^st defendant) was then the Chief Executive Officer of the 4^th defendant company. As a manager of the company he directly or indirectly dealt with the plaintiffs when they invested with his company. In response to issue9, it could be stated that the plaintiffs only had dealings with the 1^st and 4^th defendants. As concluded earlier, the 3^rd defendant had changed its name to the 4^th defendant. It has been established so far that the veil of incorporation cannot be lifted to ascribe liability to the 1^st and 2^nd defendant for the alleged violations by the 4^th defendant company. It has also been established that the 3^rd defendant morphed into the 4^th defendant company and that the name of the 3^rd defendant company was not in existence when the investment transaction was made. It is, therefore, the 4^th defendant company who owes the plaintiff the sum of GHC 355,699.50 being the amount payable to the plaintiff on 22^nd August, 2014.

Was the 5^th Defendant Negligent?

I now turn to the regulatory role of the 5^th defendant, Bank of Ghana (BOG) to ascertain whether the BOG failed in its regulatory role over the 4^th defendant and whether the said failure, if any, led to the financial loss suffered by the plaintiff. It would ultimately be determined whether the 5^th defendant was negligent. The Banking Act, 2004 (Act 673) gives the Bank of Ghana its regulatory mandate. This Act has been repealed and re-enacted as the Banks and Specialised Deposit-Taking Institutions Act, 2006 (Act 930).

At the time of the alleged negligence, Act 673 was in operation and so the rights accrued by the parties under Act 673 are not affected by the repeal of the Act. See Industrial and Commercial Workers Union of the Trade Union Congress v Bank of Ghana [2003-2005] 1 GLR 37.

The Banking Act, 2004 was originally enacted in 2002. The preamble of the 2004 Act provides:

“AN ACT to amend and consolidate the laws relating to banking, to regulate institutions which carry on banking business and to provide for related matters.”

Sections 2(1), 52, 54, 8 and 13 of Act 673 defined the scope and extent of the obligation imposed on the 5^th defendant.

By section 2 (1) of the Act, the Bank of Ghana was empowered to exercise supervisory and regulatory authority in all matters relating to banking business and is responsible for(a) promoting an effective banking system,(b) dealing with an unlawful or improper practice of a bank, and(c) considering and proposing reforms of the laws relating to banking business.(d) ensuring the soundness and stability of the financial system in this country.

Under section 52(1),“the Bank of Ghana may issue directives to banks generally or to a particular bank where it is satisfied(a) that it is necessary to secure the proper management of a bank generally,(b) that it is necessary to prevent the affairs of a bank being conducted in a manner detrimental to the interests of depositors or prejudicial to the interests of the bank …”

Section 54 also empowered the Bank of Ghana to conduct on-site examination of the operations and affairs of a bank, with reference to its books and records including documents, at intervals of not less than once a year. This was done without prior notice to the bank. Sections 8 and 13 of the Act also clothed the Bank of Ghana with the discretionary power to revoke the license of a bank if it is necessary to do so.

In the amended statement of claim the plaintiffs say that the 5th Defendants failed or refused to carry out its regulatory and supervisory role and as a result the 1st and 2nd Defendants were able to manipulate the 3rd and 4th Defendants’ companies to deceive them and the public to invest with the 4^th defendant company, Noble Dream Micro Finance Limited. The statement of claim also alleged negligence against the 5th Defendant. The allegations of the negligence against the 5th Defendants are to the effect that the 5th defendant knew of the failings of the 1^st, 2^nd, 3^rd and 4^th defendants but did not stop them from operating and as a result it has caused them (the plaintiffs) a fortune. The plaintiffs particularized the allegations of negligence against the 5^th defendants as follows:

a) Failing and or refusing to carry out its supervisory and regulatory role in a manner required and expected of the 5TH Defendant.

b) Failing to take action against the 1^st, 2^nd, 3^rd and 4^th defendants and thus allowing them to take undue advantage against unsuspecting members of the public, including my wife and my good self and thus causing us extensive financial loss.

c) Failing and refusing to take disciplinary action against the Directors of the 3rd and 4th Defendants and therefore (sic) the 1st and 2nd defendants when they were engaged in conflict of interest situation especially with Eden Group more specifically Eden Micro Finance Ltd. Attached is Exhibit DCP “10” EDEN MICRO FINANCE GIVE DEBT RELIEVE TO FIRE VICTIMS.

In Ghana Highway Authority v Mensah (1999-2000)2GLR 237, the Court of Appeal held (in Holding1) that:

“Negligence as a tort occurred when the defendant (i) owed a duty of care to the plaintiff; broke that duty by failing to come up to the standard of care required by law; and (iii) thereby caused legally recognized damage to the Plaintiff.”

Negligence goes beyond mere ‘heedless or careless conduct’ as held by Lord Wright in Lochgelly Iron and Coal Co v M’Mullan [1934] A.C. 25. It connotes the concept of duty of care, breach of that duty of care and the damage resulting thereby suffered by the one to whom the duty was owed. The injured party must show that the defendant owed him a duty to take reasonable care to protect him from the kind of harm suffered resulting from a breach in that duty of care. These are the elements without which an action for negligence will fail. Thus, for the plaintiffs to succeed they must establish the ingredients of negligence on a balance of probabilities.

The foremost question is whether in the discharge of their regulatory tasks, the 5^th defendant owed the plaintiffs and members of the public who invested their monies with the 4^th defendant company a duty of care? The 5^th defendant has rejected the allegation of negligence. It argued forcefully through its counsel that the it does not owe the plaintiffs a duty of care. Counsel submitted in his written address that the 5^th defendant was not privy to the contract between the plaintiffs and the 4^th defendant and that it is not within the regulatory and supervisory mandate of 5^th defendant to assume the responsibility of managing the risks inherent in the investment and operational decisions of the banks, such that in the event of liquidity crisis of a bank, it should be held liable for negligence. He submitted that it was largely due to the failure of or inability of the 4^th defendant to meet the demands of depositors upon request, including that of the plaintiffs, which led to the run on the 4^th defendant.

Counsel invited the court to dismiss the claim as there is no proximity between the 5^th defendant and customers of the 4^th defendant non-bank financial institution including the plaintiff for the 5^th defendant to be liable for negligence. He cited the following cases in support of this principle of law:

Yuen Kun Yeu and Ors v AG of Hong Kong [PC] [1987] 2 All England Reports, 705;

Minorities Finance Ltd vs Arthur Young & Johnson Matthey vs Arthur Young (Bank of England, Third Party) QBD [1989] 2 All England Report, 105; and

Three Rivers District Council & Ors vs The Governor & Company of the Bank of England [2000] UKHL 331.

For a defendant to be held liable for negligence, a proximate relationship must exist between the defendant and the claimant to give rise to a legal duty of care. Where there is no prior relationship between the parties, an omission to act will not constitute an actionable negligence, however readily foreseeable the harm to the claimant. See Sutradhur v NERC [2006] UKHL 33.

In the Yuen Kun Yeu case (supra), the plaintiffs invested their monies in a deposit-taking company which later collapsed and was eventually wound up. The plaintiffs instituted proceedings against the Attorney-General on behalf of the Commissioner for Deposit-taking Companies claiming payment of the sums invested together with interest general damages and damages for distress on the grounds of negligence and/or breach of statutory duty. It was held that:

(1) An action does not lie against the Commissioner in his capacity as a public officer if he fails to exercise a statutory, discretionary power in a particular way;

(2) There was no sufficient proximity of relationship between the Commissioner and the plaintiffs to give rise to a legal duty of care to avoid damage to the plaintiffs for economic loss;

(3) Foreseeability by itself is insufficient to give rise to a cause of action;

(4) As a matter of public policy, the plaintiffs should have no right of action against the Commissioner;

(5) No statutory duty of care is owed by the Commissioner to give rise to civil liability for breach unless he acted ultra vires for example by reason of mala fides, willful misconduct or deliberate failure to exercise his statutory powers or if he acted for some ulterior or improper motive.

Also, in the Three Rivers District Council case (supra) where over six thousand people who lost their deposit with the Bank of Credit and Commerce sued the Bank of England for negligence in the performance of its regulatory and supervisory duties, the House of Lords held that the Bank of England could not be sued in negligence for failure of a bank. Counsel for the plaintiffs has urged on the court to disregard these authorities since they are not binding on the court. Foreign decisions are recognized by the Ghanaian Constitution as part of the laws of Ghana. These decisions are, however, not binding on Ghanaian courts – they are only persuasive. They are applied alongside local decisions. In Fodwoo v Law Chambers & Co. the Supreme Court explained the objective of maintaining such duality:

“We do not hold ourselves bound by this decision [Kitchen v Royal Air Force Association] but the reason underlying the formulation of these principles appeals to us and we respectfully follow it. Indeed we cannot shut our eyes to the desirability of a homogenous development and application of the law in two Commonwealth countries having cognate jurisprudence.”

These decisions may be applied to fortify our laws, most especially when there is dearth of local authorities on a subject such as bank regulator’s liability for negligence. In this regard, I am persuaded by the cases cited above not for the sake of convenience but for the potency of the legal principles which they espouse. In the instant case, the 5^th defendant was not privy to the contract between the plaintiffs and the 4^th defendant company. It was not part of the governance structure of the 5^th defendant. It never participated in its investment decisions. Apart from ensuring compliance with statutory and regulatory requirements, it does not determine the contractual relationship between the 4^th defendant its stakeholders including employees and customers. There is no proximate relationship between the 5^th defendant and customers of the 4^th defendant for a duty of care to exist. Existence of such a duty would lead to an absurd situation where the 5^th defendant had to participate in the decision to do business with customers of banks and the other financial institutions under their watch. This is certainly a recipe for distraction of the 5^th defendant’s regulatory duty. The result is that the 5^th defendant is not liable for negligence.

It is also my considered opinion that the 5^th defendant did not breach its regulatory and supervisory duty over the 4^th defendant. It acted within the confines of the law when it conducted an examination of the operations and affairs of 4^th defendant company. The said examination was conducted prior to plaintiffs’ investment dealings with 4^th defendant. Exhibit BOG ‘1’, diagnosed as “CRITICAL” the financial situation of the 4^th defendant at the time of the inspection. According to the plaintiffs, this diagnosis should have led to the revocation of the license of the 4^th defendant by the 5^th defendant. Indeed, the 5^th defendant had the discretionary power to revoke the license of a bank if it is reasonable to do so.

We should, however, not lose sight of the fact that the decision to revoke a license can be detrimental to customers of a bank if not exercised in a prudent manner and that explains why the 5^th defendant recommended ways of getting the company out of the woods instead of shutting it down. For instance, in paragraph 13 of the examination report (exhibit BOG 1), it recommended that the company should put in place a mechanism for recovery of the outstanding loan amounts from some stated companies. It is, indeed, a normal (albeit an uncomfortable) occurrence for banks to experience liquidity challenges in their operations as a going concern.

Consequently, I consider the 5^th defendant decision not to revoke the license of the 4^th defendant at that time as a sound regulatory decision. This decision was in tandem with the discretionary power handed to the 5^th defendant in the performance of its statutory duty by sections 8 and 13 of Act 673. Lord Denning in Meade v. Haringey (1979) 2 WLR 637 dealt with the statutory duty of a local authority at p.647 as follows:

“If a statute imposes a duty on a public authority – or entrusts it with a power – to do this or that in the public interest, but expresses it in general terms so that it leaves it open to the public authority to do it in one of several ways or by one of several means, then it is for the public authority to determine the particular way or the particular means by which the performance of the statute can best be fulfilled. If it honestly so determines – by a decision which is not entirely unreasonable-its action is then intra vires and the courts will not interfere with it: see especially by Lord Diplock in Dorset Yacht Co. Ltd. v. Home Office (1970) A.C. 1004, 1067-1068. But if the public authority flies in the face of the statute, by doing something which the statute expressly prohibits, or by failing to do something which the statute expressly enjoins, or otherwise so conducts itself-by omission or commission – as tofrustrate or hinder the policy and objects of the Act, then it is doing what it ought not to do – it is going outside its jurisdiction – it is acting ultravires. Any person who is particularly damnified thereby can bring an action in the courts for damages or an injunction, whichever be the most appropriate.”

A regulator is not liable for an honest mistake, misjudgment or negligent act or omission so long as he acts within his powers in the performance of his task. He can only be liable for willful misconduct or

fraud. There is no evidence of any act of reckless indifference or fraud on the part of the 5^th defendant.

In view of this, it can also not be held liable for breach of statutory duty.

Legislative Reform

There is a worrying trend in the country regarding the collapse of financial institutions and this development has left depositors in limbo. It is obviously not the responsibility of the state to underwrite the risks inherent in the management of deposits by banks and non-bank financial institutions. The state is expected to create an enabling environment for banks to flourish and for depositors to be assured of that their deposits are safe. The passage of the Depositors’ Insurance Act, 2016 was enacted to mitigate the losses suffered by depositors in the event of failure of a bank.

Perhaps steps can also be taken to reform the regulatory architecture relating to our banks. We can explore the possibility of decoupling the banking regulatory and supervisory functions of the Bank of Ghana so it can concentrate on monetary policy. Such a move can tackle the potential conflict of interest challenges presented by the huge tasks involved in monetary policy on one hand and banking supervision and regulation on the other. This is not to suggest that the Bank of Ghana has failed in its regulatory role but the complexities of the banking industry at present call for an enhanced focus. We can take a cue from the UK in their Financial Services Authority which was formed to free the Bank of England of its banking supervision and regulatory duties.

The need for such a separation is backed by the notion that when a public institution is faced with different goals, the likelihood of trade-off between two or more goals or prioritization of goals remains a normal occurrence. Agencies have systematic incentives to privilege certain functions over others – specifically, they tend to privilege functions that are easily measured over conflicting functions that are difficult to measure. In my view, banking supervision and regulation is similar to health and safety regulation – most often their relevance is only felt when there is an accident. They can therefore be sacrificed in the pursuit of a competing function which appears to be more measurable. The solution lies in the creation of an independent agency to exclusively perform such functions.

Are the Plaintiffs entitled to their Claims against the Defendants?

From the foregoing reasons, it goes without saying that the plaintiffs are only entitled to their claim against the 4^th defendant. Their claims against the 1^st, 2^nd, 3^rd and 5^th defendants fail as they failed to discharge the burden of proof required by law. The plaintiffs are entitled to general damages as a relief since the law is that general damages lie for every infringement of an absolute right. The Supreme Court held in the case of Delmas Agency Ghana Ltd v Food Distributors International Ltd [2007/2008] SCGLR 748, 760 thus:

‘‘General damages is such as the law will presume to be the probable or natural consequences of the defendant’s act. It arises by inference of law and therefore need not be proved by evidence. The law implies general damages in every infringement of an absolute right. The catch is that only general damages are awarded.

Where a plaintiff has suffered a properly quantifiable loss, he must plead specifically his loss and prove it strictly. If he does not he is not entitled to anything unless general damages are also appropriate.’’

Conclusion

In conclusion, I order that the plaintiffs recover from the 4th defendant company an amount of three hundred and fifty-five thousand, six hundred and ninety-nine Ghana cedis fifty pesewas (GHC 355,699.50) plus compound interest rate of 7.3% (as agreed under the terms of the investment) from 22^nd of August, 20014 till date of final payment. I also award GHC 50,000.00 as general damages in favour of the plaintiffs against the 4^th defendant. Since costs follow the event, I am inclined to award costs in addition to general damages. In doing so, I have taken into consideration the provisions of Order 74 of C.I. 47 on award of costs. I have taken cognisance of the expenses incurred in prosecuting this case by the plaintiffs.

Accordingly, I award costs of GHC 20,000.00 against the 4^th defendant and in favour of the plaintiffs.

I have also looked at the 2^nd defendant’s counter claim for damages relating to the costs incurred in this litigation against the plaintiffs and I hold that the 2^nd defendant should bear his own costs.