KUMASI - A.D 2016

DATE:  18th OCTOBER, 2016
SUIT NO:  BFS/170/15


This is a debt recovery action in which the Plaintiff bank seeks to recover an amount of GH¢ 390, 275.56 arising from unpaid credit facility granted by the plaintiff to the 1st Defendant and interest thereon from 1/11/2014 to the date of final payment. Details of the grant of the credit facility and the events leading to the default are adequately captured in the Plaintiff's statement of claim filed on 28/01/15.


The 1st and 2nd defendants caused their solicitor to enter appearance on their behalf on 27/02/2015 and he proceeded to file a defence. However, the 3rd Defendant was served with the writ of summons and statement of claim by substituted service by an order of this court dated 18/03/2016 but he failed to enter appearance.


After the pre-trial stage, the court gave further directions as to the filing of witness statements.

Counsel for the 1st and 2nd Defendants who was not in court at the time orders were made for the filing of witness statements was duly served with the court notes on 28/01/2016 (see affidavit of service sworn on 28/01/2016). Subsequently, the Plaintiff's witness statement and numerous hearing notices were served on their counsel to attend Case Management Conference but he elected not to come to court and his clients did not also file their witness statements.


At the case management stage, the defence filed by the 1st and 2nd Defendants was struck out under Order 32 rule 7A (3) (b) of C.I. 47 as amended by C.I. 87. Thereafter, the Plaintiff was called upon to prove its claim against the 1st and 2nd Defendants. The sole issue set down for trial is whether or not the Plaintiff is entitled to its claim.


At the trial, the Relationship Manager of the Plaintiff/bank, Shirley Wiafe Ameyaw, testified on its behalf. She relied on her witness statement filed on 18/1/16. In her testimony, the Plaintiff's representative said the bank extended an overdraft facility (O/D) of GH¢ 200,000.00 and two term loans totaling GH¢ 187,802.80 at an interest rate of 39.92% per annum to the 1st Defendant. In respect of the repayment of those credit facilities, she told the court that the O/D was to be repaid within a period of twelve months and the two term loans of GH¢ 160,000.00 and GH¢ 27,802.80 were to be liquidated within 24 and 9 months respectively. These terms, according to the witness, were accepted by the 1st Defendant acting through its Managing Director, the 2nd Defendant. Continuing, the witness indicated that the 2nd and 3rd Defendants guaranteed the repayment of the credit facilities by executing a mortgage document and contract of indemnity in favour of the Plaintiff. She tendered copies of the facilities sanctions memo which looks more or less like the usual facility letter, the acceptance by the 1st Defendant, the mortgage document and contract of guarantee as exhibits A, B, C and D.


Concluding, the witness stressed that as at 31/10/2014, the total indebtedness of the Defendants stood at GH¢ 390, 275.56 as evidenced by copies of the Statement of Accounts attached as exhibits E series.


Indeed, the exhibits tendered by the Plaintiff's representative give flesh to the averments contained in the Plaintiff's statement of claim which were repeated on oath. I however notice from exhibit A that in addition to the O/D and two term loans in contention, the Plaintiff was also granted a Bank Guarantee of GH¢ 130,00.00. It may well be that, Bank Guarantee was not utilized and since the Plaintiff's is silent on the said guarantee and the Defendants have also not made any reference to it , I am also entitled to ignore it.


The facilities in issue were accepted in unequivocal terms by the 2nd Defendant on the face of exhibit

B written on the letter head of the 1st Defendant and signed by the 2nd Defendant. Exhibit B is dated 25/03/2014 and it reads:



I am pleased to inform you that I accept the terms and conditions of the credit facilities granted to us to augment my working capital in the sale of consumable products.


We undertake to channel 100% of sales proceeds through our account at Agricultural Development Bank.


Sgd. Joseph Kodua.


I have also perused exhibit C. It is a valid legal mortgage over the 2nd Defendant's landed property at Santasi New Site, Kumasi. Among other things, the 2nd Defendant undertook to refrain from any transfer of all that property or his interests therein without the prior written consent and concurrence of the plaintiff bank. Exhibit C is also a continuing indemnity executed by the 2nd and 3rd Defendants in favour of the Plaintiff until the debt is fully liquidated.


Now, has the Plaintiff been able to prove the indebtedness of the Defendants as claimed? This can be ascertained from the exhibit E series which capture the withdrawals in respect of the O/D facility and Terms Loans, the applicable fees,interests charges and repayments made. These documents were served on counsel for the 1st and 2nd Defendants ahead of the trial and he did not raise a finger at it. He did not also find it necessary to come to court to challenge either the entries or the debit balances indicated therein. After carefully studying the exhibit E series, I notice that the total debit balance on the O/D and loan accounts of the 1st Defendant stood at GH¢ -387, 497.82 ( i.e. GH¢ - 267, 497.84 in exhibits E1 and E2 added to GH¢ - 119,999.98 in exhibit E3 as at 31/10/2014 and 28/10/2014 respectively).


From the exhibits E series, I am unable to see how the Plaintiff arrived at the sum of GH¢ 390, 275.56 endorsed on the writ of summons. The Plaintiff's representative merely exhibited these documents without commenting on them and thereby leaving the court to make its own observations and draw its conclusion. And that is what I did to arrive at GH¢ 387, 497.82.


The principles of proof in civil suits apply to the circumstances of this case even though the 1st  and

2nd Defendants had their defence struck out and did not participate in the trial. By the provisions of sections 11(4) and 12 of the Evidence Act, 1975 NRCD 323, the Plaintiff is enjoined to lead evidence which the court must assess on the balance of probabilities and where the Plaintiff's evidence is more probable, the scale will tilt in his or her favour. Indeed, this position of the law was adequately discussed in the case of Takoradi Floor Mills v Samir Faris ( 2005-2006) SCGLR 882 at 884 (holding 5).


Having carefully evaluated all the evidence on record, I am convinced that as at the end of October, 2014, the 1st Defendant's indebtedness out of the total exposure granted him stood at GH¢ 387, 497.82. It is on record that the 3rd Defendant failed to file any process in this case and that the plaintiff proceeded against only the 1st and 2nd Defendants. I am mindful of the legal position as contained in our Companies Act and in decided cases that a company once incorporated assumes its own personality, distinct from its directors and members and unless certain exceptions could be shown, its veil of incorporation would not be lifted. I need not belabour this position which the Supreme Court extensively discussed in Morkor v Kuma (East Coast Fisheries case) (1998-99) SCGLR 620. See also Quartson v Quartson (2012)2 SCGLR 1077 at 1080 (holding 4). By this principle, a company is civilly liable for its own debts as if it were a natural person.


However, I must be quick to point out that the 2nd Defendant herein executed a contract of indemnity in favour of the Plaintiff bank and even mortgaged his landed property as security for repayment of the debt of the 1st Defendant. He cannot escape liability under these circumstances and is liable to pay the debt which the 1st Defendant company has failed to liquidate. Thus, the plaintiff is entitled to enter judgment against the 1st and 2nd defendants for the sum of GH¢ 387, 497.82


Next, I turn to the question of interest. Per relief (b) endorsed on the Plaintiff's writ of summons, it is seeking interest at the prevailing bank rate from 1/11/2014 to the date of final payment. Indeed, the Plaintiff pleaded in paragraph 4 of its statement of claim that the interest exigible on the facilities in issue at the time they were granted was 32.92% per annum. But in exhibit A, the Plaintiff bank clearly indicated that the interest rate was subject to change without recourse to the applicant. It is therefore not surprising that interest rates of 38.40 % and 35.91% were charged at various times in exhibits E2 and E3. These notwithstanding and guided by the Court (Award of Interest and Post judgment Interest) Rules, 2005 C.I. 52, I will grant the Plaintiff's claim for interest at the prevailing bank rate from 1/11/2014 till date of final payment.


Accordingly, judgment is entered in favour of the Plaintiff against the 1st and 2nd Defendants in the sum of GH¢ 387, 497.82 and interest thereon at the prevailing commercial bank lending rate from 1/11/2014 to the date of final payment.


I also award cost of GH¢20,000.00 against the 1st and 2nd Defendants in favour of the Plaintiff.