BSIC GHANA LTD {PLAINTIFF} vs. CAPTAINS HOTEL TRAVEL & TOURS LTD {DEFENDANTS} SOLOMON KOBIA AND JEFFREY PETER KOBIA
  • IN THE SUPERIOR COURT OF JUDICATURE
    IN THE HIGH COURT (COMMERCIAL DIVISION)
    ACCRA - A.D 2016
BSIC GHANA LTD - (Plaintiff)
CAPTAINS HOTEL TRAVEL & TOURS LTD, SOLOMON KOBIA AND JEFFREY PETER KOBIA - (Defendants)

DATE:  15TH JUNE 2016
SUIT NO:  BFS/23/14
JUDGES:  JENNIFER DODOO (MRS) JUSTICE OF THE HIGH COURT
LAWYERS:  KWABENA ADU-KUSI FOR PLAINTIFF
A. T. TAMAKLOE FOR DEFENDANTS
JUDGMENT

 

The Plaintiff’s claims against the Defendants were as follows:

a. The recovery of the sum of GH¢543, 499.92 being the amount outstanding as at October 31st 2013 on the credit line facility advanced to the 1st Defendant.

b. The recovery of the sum of GH¢124,718.80 being the amount outstanding as at October 31st 2013 on the medium term loan facility advanced to the 1st Defendant.

c. Interest on the sum of GH¢543, 499.92 at the agreed rate of 30.25% from October 31st 2013 to the date of final payment

d. Interest on the sum of GH¢124,718.80 at the agreed rate of 31% from October 31st 2013 to the date of final payment.

e. The recovery of the sum of GH¢185,991.45 being the amount outstanding as at October 31st 2013 as penal charges on the two facilities.

f. Penal interest on the sums outstanding on the two facilities at the agreed rate of 12% to the date of final payment.

g. An order for the judicial sale of the parcel of land located at Ablekuma Accra that is stamped as LVD8607A/2011.

h. An order for the sale of the stocks of 1st Defendant assigned to the Plaintiff.

i. Legal fees being 10% of the sum due the Plaintiff at the date of final payment.

j. Costs

 

It was the Plaintiff’s case that it had advanced a credit line facility of GH¢250,000.00 and a medium term loan of GH¢100,000.00 to the 1st Defendant. Whilst the credit line facility attracted interest at 30.25% per annum, the medium term loan attracted interest at the rate of 31% per annum.

 

The Plaintiff averred further that both facilities each attracted a default charge of 2% and penal interest at the rate of 12% per annum on all outstanding balances on expiry.

 

 

According to the Plaintiff, both facilities were secured with:

(a) A parcel of land situate at Ablekuma, Accra

(b) Personal Guarantee of Solomon Kobia in the amount of GH¢400,000.00

(c) Assignment of stocks and receivables.

 

The 2nd and 3rd Defendants in their defence denied being guarantor and mortgagor respectively for the facilities granted to the 1st Defendant. Whilst admitting that the

Plaintiff had extended credit facilities to the 1st Defendant, they denied that the 1st Defendant’s indebtedness was for the amounts endorsed on the writ of summons.

 

The issues settled for trial were:

1. Whether or not the Defendants are liable for the amount claimed?

2. Whether or not Plaintiff applied the agreed interest rate at premium in the agreement?

3. Whether or not the Plaintiff disbursed the facilities approved to the Defendant?

4. Whether or not payment made by Defendant is reflective of Plaintiff’s Statement of Accounts?

 

The general rule in evidence is as stated in Ababio v. Akwasi (1994/95) 2 GBR 774 is that a party whose pleadings raised an issue essential to the success of its case assumes the burden of proving such issue. And as ;per Re: Ashalley Botwe Lands; Adjetey Agbosu & Ors v. Kotey & Ors (2003/2004) SCGLR 420, the burden of producing evidence in any given case was not fixed, but shifted from party to party at various stages of the trial, depending on the issue(s) asserted and/or denied.

 

The court will first deal with issue (3) which is:

 

Whether or not the Plaintiff disbursed the facilities approved to the Defendant?

 

Exhibit A is a Credit Facility Offer Letter dated June 21, 2011. It is in respect of a Credit Line Renewal of GH¢250,000.00. The purpose is “to support your company’s working capital facilitate its business operations”. Exhibit A also makes reference to an existing Medium Term Loan of GH¢100,000.00. Exhibit A gives the total exposure of the 1st Defendant as GH¢350,000.00. This presupposes that the 1st Defendant had taken an earlier facility and that Exhibit A was a renewal of the earlier facility.

 

Exhibit B (the same document as Exhibit E) which is dated March 22, 2010 shows the 1st Defendant’s total exposure as being GH¢100,000.00. This was an earlier credit line facility the Plaintiff granted to the 1st Defendant.

 

Exhibit N is a letter from the 2nd Defendant to the Head, Credit Department of the Plaintiff Bank and dated 23rd August 2010. It is as follows:

ENHANCEMNENT OF CREDIT LINE FACILITY FROM GH¢100,000.00 TO GH¢250,000.00

 

Reference is made to your offer letter dated 22nd March 2010 and accepted by me on 29th March 2010 for a credit line facility of GH¢100,000.00.

 

I wish to request for an enhancement in the credit line from the approved limit of GH¢100,000.oo to a new limit of GH¢250,000.00.

 

The increase is to support my working capital to enable me stock Kick Energy drink and Nestle Products for onward distribution.

 

The amounts drawn on the Credit Line Facility as deduced from Exhibit C (the Statement of Accounts) between April 2010 and September 2010 was as follows:

·         On 29th April 2010 the 1st Defendant’s account was credited with GH¢2,000.00 from the Credit Line Account.

·         On 30th April 2010 the 1st Defendant’s account was credited with GH¢42,000.00 from the Credit Line Account

·         On 11th May 2010 the 1st Defendant’s account was credited with GH¢16,000.00 from the Credit Line Account.

·         On 6th July 2010 there was a debit of GH¢10,000.00 on the 1st Defendant’s account.

On 30th August 2010 the 1st Defendant’s account was credited with GH¢50,000.00 from the Credit Line Account.

·         On 7th September 2010, the 1st Defendant’s account was credited with GH¢95,445.00

·         On 7th September 2010, the 1st Defendant’s account was credited with GH¢4,500.00

·         On 9th September 2010, the 1st Defendant’s account was credited with GH¢25,000.00

·         On 13th September 2010, the 1st Defendant’s account was credited with GH¢25,000.00

 

The total amount utilized by the 1st Defendant on the credit line facility between April and September 2010 was GH¢249.945.99. This figure has been corroborated by both Exhibits D (the 1st Defendant’s Online Statement of Account) and CE2 (the Referee’s Report). The interest of 30.25% per annum worked out to GH¢75,608.36 (i.e. 30-25÷100 x 249, 945.00). The sum total repayable would therefore be GH¢249.945.00 plus the interest of GH¢75,608.36.totalling GH¢325,553.36.

 

On 20th April 2011, an amount of GH¢100,000.00 was credited to the 1st Defendant’s account. The narration accompanying this disbursement is Cash Deposit. Set up New loan of accounts. The reference number for this transaction was given as 203120-000-270319-000

 

From the foregoing, the Plaintiff has disbursed the amounts of GH¢249,945.00 and GH¢100,000.00 to the 1st Defendant.

 

The court would now determine the issue of: Whether or not Plaintiff applied the agreed interest rate at premium in the agreement?

 

It is an established principle that where interest being claimed is based on an agreement, it is to be endorsed on the writ, pleaded and sufficient evidence led on it to prove it adequately in the same way as a debt. See the cases of Holland West Africa v. Pan African Trading Company (1976) 2 GLR 179, Diab v. Quansah (1974) 1 GLR 101 and Helloo v. Tetteh (1992) 2 GLR 112.

 

In Plaintiff’s representative’s evidence in chief on 19th August 2015, this is what transpired:

Q. Can you tell the court the interest rate that was applied to the various facilities offered the 1st Defendant?

A. For the credit line facility interest was supposed to run at 34.5% per annum, which is made up of the base of 29.5% and a margin of 5%. Interest for the medium term loan was at 31% per annum which was made up of a base of 26% per annum and a margin of 5% per annum.

 

In cross-examination of the Plaintiff on 3rd December 2015, the following transpired:

Q: What rates of interest did the bank use in calculating the Defendants’ indebtedness?

A. With permission, I will read, reference is Exhibit A. Interest on the credit line facility was at the bank’s prevailing base rate plus a margin of 5% per annum making it 30-25% per annum. There is also a penalty component of 12% above the bank’s lending rate on all amounts outstanding upon expiry.

Q. Now with the credit line facility, how did you compute the interest? Is it on the amount approved or on the amount withdrawn by the Defendant?

A: Your Lordship, on the amount utilized by the Defendant.

Q. I am putting it to you that you did not compute the interest in that manner.

A. Your Lordship, that is how the interest was computed.

Q. That if you had done so, the 1st Defendant’s indebtedness to the Plaintiff would not exceed GH¢150,000.00

 

In the 2nd Defendant’s evidence-in-chief given on 19th February 2016, he told the court that the interest he negotiated with the Plaintiff on behalf of 1st Defendant was 25% per annum. The interest rates in the offer letters in evidence do not support that assertion.

 

The Defendants also did not show any calculation to guide the court how they arrived at the figure of not more than GH¢150,000.00 which they claimed as their indebtedness and the interest rate utilized. The court will therefore rely on the interest rate quoted in the facility letters and corroborated by the Plaintiff’s evidence to arrive at any conclusion. This would be 30-25 for the credit line facility and 31% for the medium term loan.

 

The court finds from Exhibit A that the 1st Defendant was to have made good on its indebtedness within 12 months of its being granted the Credit Line Facility of GH¢250,000.00. The interest rate was 30.25% per annum. There was a further 12% above the bank’s interest rate on balances outstanding upon expiry.

 

In Exhibit A, the interest rate has been pegged at 30.25% per annum for the Credit Line Facility. In Exhibit E1, the Medium Term Loan was to attract interest of 31% per annum.

 

The next issue would be: Whether or not payment made by Defendant is reflective of Plaintiff’s Statement of Accounts?

 

The 2nd Defendant stated that he had made certain payments which had not been reflected in the Plaintiff’s Statement of Accounts

 

In Exhibit B (the Credit Facility Offer Letter), the 1st Defendant was to have issued a standing order for the weekly transfer of GH¢3,000.00 from its current account to the credit of a sinking fund for the purpose of retiring the credit line facility. The 1st Defendant made payments of GH¢1,000.00 from its current account to the sinking fund account on 12th May 2010. Thereafter on 11th June 2010, four payments of GH¢1,000 (in total GH¢4,000) were made. On 22nd July 2010, 7 payments of GH¢1,000.00 were made (in total GH¢7,000.00). Then on 11th August 2010, 2 payments of GH¢1,000.00 each were made to the sinking fund. The total payments made to the sinking fund was GH¢14,000.00. These payments can be found in Exhibits F1 (1st Defendant’s Online Statement of Accounts) and CE2.

 

Also reflected in the accounts i.e. Exhibits C and F1 are debits made on the 1st Defendant’s account made in respect of the loan with reference no. 203120-000-270319-000- GHC and which was disbursed on 28th April 2011. These debits are as follows:

 

 

 

DATE

AMOUNT DEDUCTED

1.

30th September 2010

GH¢0.73

 

 

 

2.

30th September 2010

GH¢5,697.46

 

 

 

3.

29th October 2010

GH¢6,899.18

 

 

 

4.

29th October 2010

GH¢62.01

 

 

 

5.

30th November 2010

GH¢251.41

 

 

 

6.

30th November 2010

GH¢6,676.64

 

 

 

7.

31st December 2010

GH¢207.73

 

 

 

8.

31st December 2010

GH¢6,899.17

 

 

 

9.

31st January 2011

GH¢1091.92

 

 

 

10.

31st January 20111

GH¢6,899.23

 

 

11. 28th February 2011

GH¢1,255.51

 

 

 

12.

28th February 2011

GH¢5,943.92

 

 

 

13.

31st March 2011

GH¢716.71

 

 

 

14.

31st March 2011

GH¢6,580.77

 

 

 

15.

31st May 2011

GH¢6, 581.08

 

 

 

 

 

 

 

 

 

 

 

16.

30th June 2011

GH¢3.37

 

 

 

 

 

17.

30th June 2011

GH¢6,368.57

 

 

 

 

 

18.

29th July 2011

GH¢6,582.82

 

 

 

 

 

19.

29th July 2011

GH¢327.56

 

 

 

 

 

20.

30th August 2011

GH¢6,421.65

 

 

 

 

 

21.

30th August 2011

GH¢820.40

 

 

 

 

 

22.

30th September 2011

GH¢6,214.50

 

 

 

 

 

23.

30th September 2011

GH¢1,184.91

 

 

 

 

 

24.

31st October 2011

GH¢1.572.18

 

 

 

 

 

25.

31st October 2011

GH¢6,421.65

 

 

 

 

 

26.

30th November 2011

GH¢1,895.56

 

 

 

 

 

27.

30th November 2011

GH¢6,214.50

 

 

 

 

 

28.

30th December 2011

GH¢2,301.49

 

 

 

 

 

29.

30th December 2011

GH¢6,421.68

 

 

 

 

 

30.

31st January 2012

GH¢2,827.91

 

 

 

 

 

31.

29th February 2012

GH¢3,224.81

 

 

 

 

 

32.

29th February 2012

GH¢6,007.36

 

 

 

 

 

33.

30th March 2012

GH¢4,023.13

 

 

 

 

 

34.

30th March 2012

GH¢6,421.65

 

 

 

 

 

35.

30th April 2012

GH¢6,214.38

 

 

 

 

 

36.

30th April 2012

GH¢4,437.57

 

 

 

 

 

37.

31st May 2012

GH¢5,124.97

 

 

 

 

 

38.

31st May 2012

GH¢6,421.53

 

 

 

 

 

39.

29th June 2012

GH¢5,487.98

 

 

 

 

 

 

 

 

 

 

 

40.

29th June 2012

 

GH¢6,214.38

 

 

 

 

 

 

 

 

 

 

 

41.

31st July 2012

 

GH¢5,862.61

 

 

 

 

 

 

 

 

42.

31st July 2012

 

GH¢7,204.73

 

 

 

 

 

 

 

 

43.

31st August 2012

 

GH¢9,128.13

 

 

 

 

 

 

 

 

44.

31st August 2012

 

GH¢6,139.56

 

 

 

 

 

 

 

 

45.

28th September 2012,

 

GH¢6,722.52

 

 

 

 

 

 

 

 

46.

28th September 2012

 

GH¢8,833.73

 

 

 

 

 

 

 

 

47.

31st October 2012

 

GH¢7,397.48

 

 

 

 

 

 

 

 

48.

31st October 2012

 

GH¢ 9,128.25

 

 

 

 

 

 

 

 

49.

30th November 2012

 

GH¢7732.28

 

 

 

 

 

 

 

 

50.

30th November 2012

 

GH¢8833.74

 

 

 

 

 

 

 

 

51.

31st December 2012

 

GH¢8881.01

 

 

 

 

 

 

 

 

52.

31st December 2012

 

GH¢9128.29

 

 

 

 

 

 

 

 

53.

31st January 2013

 

GH¢9711.43

 

 

 

 

 

 

 

 

54.

31st January 2013

 

GH¢9128.69

 

 

 

 

 

 

 

 

55.

28th February 2013

 

GH¢9,455.19

 

 

 

 

 

 

 

 

56.

28th February 2013

 

GH¢8,245.81

 

 

 

 

 

 

 

 

57.

28th March 2013

 

GH¢11,109.84

 

 

 

 

 

 

 

 

58.

28th March 2013

 

GH¢9,129.86

 

 

 

 

 

 

 

59.

30 April 2013

 

GH¢10,989.71

 

 

 

 

 

 

 

60, 30th April 2013

 

GH¢8,835.79

 

 

61 31st May 2013

 

GH¢12,122.53

 

 

62. 31st May 2013

 

GH¢9,130.32

 

 

63. 28th June 2013

 

GH¢12,491.52

 

 

64. 28th June 2013

 

GH¢8,835.79

 

 

65. 31st July 2013

 

GH¢13.686.79

 

 

66. 31st July 2013

 

GH¢ 9,130.32

 

 

 

 

 

 

 

 

 

 

67.

30th August 2013

 

GH¢14, 520.09

 

 

 

 

 

68.

30th August 2013

 

GH¢9,130.32

 

 

69.

30th September 2013

 

GH¢14,887.56

 

 

70.

30th September 2013

 

GH¢8,835.79

 

 

71.

31st October 2013

 

GH¢11,776.65

 

 

72.

31st October 2013

 

GH¢6,616.75

 

 

73.

29th November 2013

 

GH¢11,805.90

 

 

74.

29th November 2013

 

GH¢6,369.90

 

 

75.

31st December 2013

 

GH¢12,678.07

 

 

76.

31st December 2013

 

GH¢6,582.23

 

 

77.

31st January 2014

 

GH¢13,185.23

 

 

78.

31st January 2014

 

GH¢6,582.23

 

 

 

 

 

 

 

 

79.

28th February 2014

 

GH¢12,379.36

 

 

80.

28th February 2014

 

GH¢5,945.24

 

 

 

 

 

 

 

 

 

 

 

 

GRAND TOTAL

 

GH¢543,219.22

 

 

 

From 30th September 2010 through to 28th February 2014, 80 Auto cap deductions to the tune of GH¢543,219.22 were debited from the 1st Defendant’s account. What is Auto cap? In the Plaintiff’s evidence in chief on 19th August 2015 @ p. 4 the following was elicited:

Q. I can see from the statement there is a narration for auto cap. Can you explain to this court what auto cap means?

A: Auto cap simply refers to automatic capitalization of interest.

Q. So it was factored in as part of the interest for the various facilities?

A. Certainly

Q. The Defendants have indicated that there were various deductions made towards the repayment of the various facilities. What do you say to that?

A. If I understand what the defendants are claiming is that the auto cap represents payment they have made. If that is the case, that is simply not possible. Simply because the auto cap represents debits on the statement debit simply do not represent credit entries. It would be mischievous on anybody’s part to consider debit entries as payment made towards facility repayment.

 

In the 2nd Defendant’s evidence in chief given on 19th February 2016 @ pp. 3-4 he stated:

 

My Lord, the Plaintiff made me aware that unless the Defendant writes to them before deductions or the loan repayment could be made from the account is not true. For example … they have in their system at the bank what they call auto capture. Auto capture is the same as system deductions. ….. When the loan repayment is due, they have programmed their system in such a way that it deducts the principal plus interest itself.

…..Apart from the loan that I took, I don’t have any other business doing with the Plaintiff that would make them deduct my money with the exception of paying off the loan facility which I took from them.

 

In the Court Witness’s testimony, the following was elicited in cross-examination on 24th

July 2015 @ p. 4:

Q. In arriving at your report, did you factor the auto capture entries in the statement?

A. I did not.

Q. Why didn’t your report capture these transactions/

A. The bank statement’s description was repayment of loan so that is what I captured not the auto cap.

Q. Are we to understand that you choose to describe the transaction prescribed here as auto cap repayment?

A: The bank statement makes specific of repayment of the loan. So that is what I extracted.

Q. Are you also suggesting that the bank statement you relied on in the process does not contain the entries described as auto captures?

A. It captures auto cap but the description on the bank statement which relates to the repayment of the loan is what I used.

Q: So you did not factor in all the amount factored in auto cap entries?

A. I did not, because there is no description showing repayment of the loan.

Q. Did you find out what the transaction described as auto cap was?

A. I did not.

 

CW1 did not factor all these auto cap deductions in the report he submitted to the court. He also did not find out what the auto cap deductions were. However, these debits were made by the Plaintiff from the 1st Defendant’s account. These according to the Plaintiff’s representative, were factored in as the interest for the various facilities. These transactions were debits on the account. These debits were in respect of the loan.

 

In Exhibits 1 and 1A the Defence Counsel wrote to the Court Witness in respect of these auto cap deductions. These would be reproduced in full detail for their full import.

 

Exhibit 1 is dated 17th June 2015. It is addressed to the Acting Director of Finance, Judicial Service, Accra: Its contents are as follows:

 

Dear Sir,

 

RE: BSIC GHANA LTD VRS CAPTAINS HOTEL, TRAVEL & TOURS

 

We are lawyers for the Defendant in the above titled case.

 

The Defendant informs us that it has sighted what purports to be your final report in the auditing of the accounts between our client and BSIC GHANA LTD.

 

It is the view of the Defendant that a significant number of entries to its credit are not reflected and acknowledged in your report which has lead to an obviously bloated figure as his debt to the Plaintiff.

 

Our client further believes that the entries on its statement indicate that as at 28-04-2011 his debt to the Bank only stood at GH¢12,042.22 which amount was wiped off by the medium term loan of GH¢100,000.00 credited to its account on the same day.

 

It should be obvious that the interest on the GH¢100,000.00 together with the payments and automatic deductions from the Defendant’s account should keep the Defendant’s debt far below GH¢80,000.00.

 

You are therefore advised to take a further look at your report in the light of the issues raised above and bank statement attached.

 

Exhibit 1A is dated 21st June 2015 and addressed to the Manager of the Plaintiff Bank and copied to CW1. It states:

 

Dear Sir,

 

RE: BSIC GHANA LTD VRS CAPTAINS HOTEL, TRAVEL & TOURS

 

I am lawyer for the Defendants in the above titled case.

 

My client has instructed me to alert you of the numerous auto-deductions captured in his statement of account with the Plaintiff Bank.

 

You are to note that all those deductions were for the purpose of servicing the loan and so should be factored in the computation of the amount outstanding.

 

 

These letters were received in CW1’s office on 6th July 2015. Significantly, Exhibit CE2, the Report on the Reconciliation of Accounts between the parties was submitted to this court’s registry on 17th June 2015. This means that the auto capture deductions reflecting in the 1st Defendant’s Statement of Accounts could not have been captured in Exhibit CE2.

 

These deductions should have been factored in the computation of the 1st Defendant’s indebtedness to the Plaintiff.

 

The court finds that over a 4 year period from September 2010 till February 2014 an amount of GH¢543,219.22 was automatically deducted from the 1st Defendant’s account and described as auto capture. Why else would the Plaintiff be debiting the 1st Defendant’s account if these deductions were not in respect of the loan? Those debits were as put by the Plaintiff automatic capitalization of interest. These could only be payments the 1st Defendant was making in settlement of its debt. There should therefore be a set-off between the 2 figures. 1st Defendant’s debits should be set off against the indebtedness. The amount of GH¢621,043.51 stated as being owed by the 1st Defendant in Exhibit CE2 would be less the amount of GH¢543,219.22. This brings the 1st Defendant’s indebtedness to GH¢77,824.29

 

The /Defendants have stated that they made certain payments which were not factored in the Statement of Accounts. There was evidence of cash deposits in Exhibit C. These were:

 

1. 11th June 2010       GH¢2,000.00

2. 14th June 2010       GH¢1,000.00

3. 16th June 2010       GH¢6,450.00

4. 18th June 2010       GH¢10,000.00

5. 21st June 2010       GH¢5,000.00

6. 30th June 2010       GH¢8,250.00

7. 6th July 2010          GH¢3,000.00

8. 9th July 2010          GH¢15,500.00

9. 12th July 2010        GH¢3,350.00

10. 16th July 2010      GH¢3,500.00

11. 16th July 2010      GH¢12,000.00

 

But what was the evidence that these payments were made to reduce the debt? There are no narrations to that effect. The court finds that the above represented cash transfers made into the 1st Defendant’s account but the evidence did not show that the payments made were specifically to reduce the indebtedness.

 

In Re Ashalley Botwe Lands: Adjetey Agbosu & Others v. Ebenezer Nikoi Kotey & Others (2003/2004) 1 SCGLR 420 @ 465 per Brobbey JSC:

 

A litigant who is a Defendant in a civil case does not need to prove anything; the Plaintiff who took the Defendant to court has to prove what he claims he is entitled to from the Defendant. At the same time, if the court has to make a determination of fact or of an issue, and that determination depends on evaluation of facts and evidence, the Defendant must realize that the determination cannot be made on nothing. If the Defendant desires that the determination to be made in his favour

 

then he has the duty to help his own cause or case by adducing evidence before the court such facts or evidence that will induce the determination to be made in his favour. A logical sequel to this is that if he leads no such facts or evidence, the court will be left with no choice but to evaluate the entire case on the basis of evidence before the court which may turn out to be only the evidence of the Plaintiff. If the court chooses to believe the evidence on record, the Plaintiff my win, the Defendant may lose. Such loss may be brought about by default on the part of the Defendant. in the light of the statutory provisions literally relying on the common law principle that the Defendant does not need to prove any defence and therefore does not need to lead any evidence may not always serve toe best interest of the litigant even if he is a Defendant.

 

The court finds that the Defendants has been able to prove that there were auto deductions on their account made to liquidate the debt and that same was not taken into account when their indebtedness was computed.

 

The 2nd Defendant has also stated in his evidence that he purchased vehicles for some officials of the Plaintiff Bank. According to him, these officials were to have paid for the cars with deposits into 1st Defendant’s account and that was to further reduce the 1st Defendant’s indebtedness to the Plaintiff. Unfortunately, the Defendants never pleaded this material fact in their Statement of Defence. They also failed to provide details of this transaction in their Statement of Defence.

 

As a result, there this occurrence if it indeed happened was neither an issue set down for trial nor did it arise from the pleadings. In the case of Hasnem Ltd v. Swiss African (1999/2000) 1 GLR 1 @ 16 the court held that cases should be determined purely along the lines on which they were fought as disclosed by the pleadings. It was the court’s view that it would be manifestly wrong and unjust for a court to substitute or accept a case contrary to or inconsistent with that which the party himself put forward be he Plaintiff or Defendant. The court quoted with approval Lord Norman in Esso Petroleum Co. Ltd v. Southport Corporation (1956) AC 218 @ 228-229 thus:

 

“The function of pleadings is to give fair notice of a case which has to be met, so that the opposing party may direct his evidence to the issue disclosed by them. To condemn a person on a ground of which no fair notice has been given may be as great a denial of justice as to condemn him on a ground on which his evidence has been improperly excluded.”

 

It was therefore up to the Defendants to have pleaded that the Plaintiff had through its officers entered into contracts with them for the purchase of cars and the proceeds were to have been paid into the account to reduce their indebtedness.

 

See also the case of Hammond v. Odoi & anor 1982/83 GLR 1215 @ 1235 per Crabbe JSC:

 

Pleadings are the nucleus around which the case - the whole case - revolves. Their very nature and character thus demonstrate their importance in actions, as for the benefit of the court as well as for the parties. A trial judge can only consider the evidence of the parties in the light of their pleadings. The pleadings form the basis of the respective case of each of the contestants. The pleadings bind and circumscribe the parties and place fetters on the evidence that they would lead. Amendment is the course to free them from such fetters. The pleadings thus manifest the true and substantive merits of the case.

 

Accordingly, the court would confine itself to the pleadings and the issues arising therefrom. To do otherwise would be to take the Plaintiff by surprise and would be vastly unfair.

 

In any case, the evidence was lacking in this regard that there were private arrangements made between officials of Plaintiff Bank and the Defendants which would impact on the loan facilities afforded the Defendants.

 

The final issue to be considered is: Whether or not the Defendants are liable for the amount claimed?

 

From the evidence, it was obvious that the Loan Agreements (Exhibits A, B and E series) were transactions entered between the Plaintiff and the 1st Defendant which was a limited liability company. Since the Company could not sign documents by itself being an artificial person, its Managing Director/Chief Director (2nd Defendant) had to append his signature on 1st Defendant’s behalf. Though he had executed these documents, he did not do so in his personal capacity but as a Director of 1st Defendant Company, for and on behalf of the Company.

 

The 2nd Defendant however executed a Guarantee in his personal capacity not exceeding GH¢400,000.00 in favour of the Plaintiff. This is found in Exhibit H. In Paget’s Law of Banking (13th edition) it is stated at Chapter 33 @ p. 18 thus:

 

A guarantee is a promise to be liable for the debt or failure to perform some other legal obligations of another. The person to whom the promise is made; in this context, the bank, may be called the creditor, the person who makes the promise is the guarantor or surety, and the other whose obligation is guaranteed (i.e. the bank’s customer) is the principal debtor.

 

A guarantee obligation is secondary and accessory to the obligation the performance of which is guaranteed; the guarantor undertakes that the principal debtor will perform his (the principal debtor’s) obligation to the creditor and that he (the guarantor) will be liable to the creditor if the principal debtor does not perform. Therefore the guarantor’s liability for the non-performance of the principal debtor’s obligation is co-extensive with that obligation.

 

In Ellinger’s Modern Banking Law 4th edition (edited by E. P. Ellinger, Eva Lomnicka and

Richard Hooley at pp. 846-847 it is stated:

 

A guarantee is distinct from an indemnity which is an undertaking by one party to keep the other party harmless against loss arising from particular transactions, or events, and is not dependent on the continuing default of the principal debtor. An indemnity is thus in the nature of a primary rather than a secondary obligation. Unlike a guarantee, it is not required to be in writing or evidenced in writing and is usually unaffected by the fact that the obligation indemnified is void or enforceable. Additionally certain types of conduct of the creditor will discharge a guarantor but not an indemnifier.

 

Insofar as the 1st Defendant remains indebted to the Plaintiff, the 2nd Defendant is liable to settle any outstanding financial commitment or indebtedness of 1st Defendant to the Plaintiff. The 2nd Defendant by executing Exhibit H was a surety who would be liable to the Plaintiff Bank should the 1st Defendant renege on its obligations.

 

The 2nd Defendant also executed a Deed of Mortgage on 5th May 2010. He did so in trust for the 3rd Defendant. The Mortgaged Property is described in Exhibit G, the Deed of Mortgage as “all that parcel of land situate at Ablekuma, Accra in the Ga West District containing an approximate area of 0.32 acre …..  with the building or buildings erected thereon ….”

 

From the evidence, the 1st Defendant has failed to make good on the loan it took from the

Plaintiff, it therefore was inevitable that the 2nd and 3rd Defendants, the providers of security were going to be called upon to make good on the security by paying off the loan or forfeiting the property it had put up as collateral.  Coupled with this, the 2nd Defendant executed a Deed of Guarantee in which he had guaranteed repayment should the 1st Defendant default on its obligations to the Plaintiff.

 

Insofar as the 1st Defendant remains indebted to the Plaintiff, the 2nd and 3rd Defendants are liable to settle any outstanding financial commitment or indebtedness of 1st Defendant to the Plaintiff. This is because of the existence of the Deed of Mortgage with the Plaintiff entered into by the 2nd and 3rd Defendants on behalf of the 1st Defendant.

 

As stated above, the Defendants are not liable for the full amount quoted on the writ of summons. They are indebted to the Plaintiff in the sum of GH¢77,824.29 at an interest rate of 30-25% from 13th October 2013 till date of final payment. The Plaintiff is also entitled to the penal rate of 12% per annum calculated on the facility from 13th October 2013 till date of final payment.

 

Costs of GH¢10,000.00 is awarded against Defendants.

 

 

(SGD)

JENNIFER A. DODOO

JUSTICE OF THE HIGH COURT