DATE:  28TH JULY 2016
SUIT NO:  BFS/169/14


The Plaintiff’s claim against the 1st and 2nd Defendants jointly and/or severally was for an amount of GH¢464,409.75 being the outstanding balance as at the 9th day of June 2014 in respect of a credit facility granted to the 1st Defendant and guaranteed by the 2nd Defendant. The Plaintiff also made a claim for compound monthly interest of 6% from 10th June 2013 till date of final payment.


It was the Plaintiff’s case as per its Statement of Claim that it granted a loan facility of GH¢212,156.00 to the 1st Defendant, a private limited liability company to enable it purchase 2 trucks. This loan was secured by a guaranteed bond issued by the 2nd Defendant in which the 2nd Defendant guaranteed to pay to Plaintiff upon written demand the guaranteed sum of GH¢212,000.00 together with the agreed interest.


According to the Plaintiff, the 1st Defendant had failed to liquidate its indebtedness within the agreed period of 12 months. The 2nd Defendant had also failed to make good on its guarantee to repay the loan in spite of written demands made on it.


The 1st Defendant stated in its defence that though the Plaintiff purchased the articulator heads for it, these were registered in the Plaintiff’s name and the vendor did not recognize the 1st Defendant as the purchaser. These trucks heads were also insured with Star Assurance in Plaintiff’s name.


The Defendant stated further that one of the truck heads developed a gear box fault. The Plaintiff was informed yet failed to make a demand as the registered owner for the replacement or repair of under the warranty with the vendors.


The vehicle then got involved in an accident but the Plaintiff and the 2nd Defendant who were joint insured parties failed ot claim on the insurance policy. As a result, the 1st Defendant found it impossible to execute the haulage contract he had with the Ghana Bauxite Company.


The 1st Defendant made a counterclaim against the Plaintiff and the 2nd Defendant for the following reliefs:

i. A declaration that the Plaintiff was in breach of trust when it failed to make a claim under the warranty when the gear box of the articulator head got broken only 2 months after it was bought from Stella Logistics Ltd.

ii. A declaration that the Plaintiff and 2nd Defendant were in breach of trust when they failed to make a claim under the insurance policy for payment of compensation to the 1st Defendant as beneficiary when the tipper got damaged.

iii. Damages for breach of trust and loss of earnings resulting from Plaintiff’s and 2nd Defendant’s failure in making a claim or compensation to restore the damaged tipper under the insurance policy with Star Assurance Company and the Plaintiff’s failure in making a claim for replacement or compensation uner the warranty with Stella Logistic Ltd.

iv. Cost


The 2nd Defendant said it came to its knowledge long after the fact that the Plaintiff after releasing funds for the purchase of the 2 trucks had had the said trucks registered and insured in their joint names.


According to the 2nd Defendant, the trucks were insured with Star Assurance Company Ltd which was contrary to the agreement that the trucks were to be comprehensively insured with the 2nd Defendant Company.


The 2nd Defendant accused the Plaintiff of negligence saying that the Plaintiff as registered owner should have ensured that the driver who was driving the trucks possessed the appropriate driving license. It stated also that on becoming aware of the defects in the vehicle, the Plaintiff failed to claim under the warranty covering the vehicle. It also failed to claim under the insurance when the trucks were involved in an accident.


It admitted that it had issued a guarantee bond to the Plaintiff to cover the loan facility to the 1st Defendant and pursuant to that 1st Defendant had undertaken not to create any charge on the 2 trucks.


The 2nd Defendant contended that it was entitled to be indemnified by the 1st Defendant in the event that the Plaintiff called in the guarantee bond.


The issues slated for trial were:

1. Whether or not the 1st Defendant is a registered owner of the vehicle who could enforce a warranty given by the vendor of the articulator heads.

2. Whether or not the 1st Defendant could make a claim under the Insurance Policy when the articulator heads were not insured in its name.

3. Whether the Plaintiff was in breach of trust in not making a claim from the insured and under the warranty?

4. Whether or not the Plaintiff is entitled to its claim for the sum of GH¢389,927.00 from 1st and 2nd Defendants?

5. Whether or not the 2nd Defendant is liable jointly and severally for the inability of 1st Defendant to liquidate its indebtedness to Plaintiff.


Whether or not the 1st Defendant is a registered owner of the vehicle who could enforce a warranty given by the vendor of the articulator heads?


In the case of Fosua & Adu-Poku v. Dufie (deceased) and Adu-Poku Mensah (2009) SCGLR 316, the court held that Section 11(4) of the Evidence Act, 1975 NRCD 323 put the obligation in civil proceedings of producing evidence on a party to produce sufficient evidence so that on all the evidence, a reasonable mind could conclude that he existence of the fact was more probable than its non-existence.


Have any of the parties been able to lead such evidence?


In paragraph 2 of the Plaintiff’s Reply and Defence to the 1st Defendant’s Counterclaim filed on 8th August 2014, it stated thus:


In reply to paragraph 2, Plaintiff states that it agreed with 1st Defendant that even though it was the owner (since the invoice covering the trucks were issued in the name of 1st Defendant), by virtue of the fact that the trucks were being used as security for the loan, same must be registered in the joint names of Plaintiff and 2nd Defendant.


In cross-examination of the Plaintiff’s representative by 1st Defendant’s Counsel, this is what transpired:

Q: Mr. Kenu, these trucks were also registered in the name of Dalex. Is that not so?

A. It was registered in the namnes of Dalex and that of the 2nd Defendant by way of security. This is a normal practice in financial institutions where vehicles are registered in the name of financiers … so that when a client fully repays the facility, the documents are transferred into his name. …

Q. If a vehicle is registered with DVLA in the name of Mr. A, I am putting it to you that the owner of that vehicle is Mr. A and no one else.

A. At all material times the vehicle has been in the possession of 1st Defendant. He actually determines who to employ to drive the vehicle on his behalf. But as I indicated earlier, it is a normal practice in the financial institution to register vehicles in the name of the financiers until full payment is received from the client for transfer to be effected in his name.


The 1st Defendant has tendered in evidence, Exhibit 2. Exhibit 2 shows that there was a change in ownership of the JAC truck with Registration No. GN 962-13 from the name of Stellar Logistics to the names of Dalex Finance/SIC Insurance Therefore, the records show that the registered owner of the vehicles are the Plaintiff and 2nd Defendant. They are on record as being the legal owners of the trucks. Section 35 of the Evidence Act, 1975, NRCD 323 states:


“The owner of the legal title to property is presumed to be the owner of the full beneficial title.”


From the evidence however, the 1st Defendant though not the legal owner had the benefit of the vehicles as they were in 1st Defendant’s possession. Stellar Logistics had transferred the vehicles to the Plaintiff because Plaintiff had paid the purchase price to Stellar Logistics directly. Plaintiff and 2nd Defendant as legal owners of the vehicles could have been the only entities which could enforce the warranty given by the vendor of the articulator heads. The Plantiff should have had the vehicles registered in the joint names of the Plaintiff and the 1st Defendant.


In the same vein, the 1st Defendant could not make a claim under the insurance policy as the insured parties under the policy were Plaintiff and 2nd Defendant. (See Exhibit 3).


Exhibit 3 is an insurance policy drawn on Star Assurance for 2 vehicles with registration numbers GN 961-13 and GN 962-13. The insurance policy is in the names of Dalex Finance Company Ltd and SIC Insurrance Company Ltd. 1st Defendant’s name did not appear on the face of Exhibits 2 and 3.


Whether the Plaintiff was in breach of trust in not making a claim from the insured and under the warranty?


In Parker and Mellows: The Modern Law of Trusts (9th edition) edited by A. J. Oakley the author relying on Underhill and Hayton, Law of Trust and Trustees described a trust @ p. 14 as:


“an equitable obligation binding a person (who is called a trustee) to deal with property over which he has control (which is called the trust property) for the benefit of persons (who are called beneficiaries or cestuis que trust) of whom he may himself be one and anyone of whom may enforce the obligation.”


The learned authors referred to the case of Re: Scott (1948) SASR 193 @ 196 for the judicial definition of trust which is:


“the word trust refers to the duty or aggregate accumulation of obligations that rest upon a person described as a trustee. The responsibilities are in relation to property held by him, or under his control. That property he will be compelled by a court in its equitable jurisdiction to administer in the manner lawfully prescribed by the trust instrument, or where they be no specific provision written or oral, or to the extent that such a provision is invalid or lacking, in accordance with equitable principles. As a consequence the administration will be in such a manner that the consequential benefits and advantages accrue, not to the trustee, but to the persons called cestuis que trust, or beneficiaries, if there be any, if not, for some purpose which the law will recognize and enforce. A trustee may be a beneficiary in which case advantages will accrue in his favour to the extent of his beneficial interest”


Whether or not the Plaintiff is entitled to its claim for the sum of GH¢389,927.00 from 1st and 2nd Defendants?


It is not in dispute that the Plaintiff extended a facility of GH¢212,156.00 to the 1st Defendant. Exhibit A evidences the fact that the 1st Defendant did apply for and was granted a loan and was given a payment schedule. In the case of Barclays Bank (Gh) Ltd v. Sakari (1996/97) SCGLR 639 the Plaintiff Bank had sued to recover loans it had given to the Defendant. The Defendant in its defence said it had used the money given to it to purchase a truck. Proceeds of this truck were meant to be used in repaying the loan. After repeated demands, the Plaintiff took action in court to recover the money due and owing to it. The Defendant pleaded the common law doctrine of frustration arising from the unexpected seizure of the truck it had purchased.


The Supreme Court before which the matter went held that frustration occurred when an external event of some kind, which is not the responsibility of either parties rendered further performance of the contract impossible or was radically different from what had been contracted for. The court was however of the view that it was not every event affecting any term of a contract that would amount to frustration. The court held further that the basic duty of the court was to construe the contract to discover the obligation created therein – the obligation which unfulfilled by a party would entitle the other to sue for a breach of it. The court said @ p. 647:


whenever someone goes for a loan to buy a vehicle and he is obliged to repay the loan from the earnings of the vehicle, and unfortunately the vehicle is involved in an accident or other mishap, does the loan contract becomes frustrated. Certainly not! Because the operation of the vehicle, though a term of the loan contract, is not the obligation of the borrower to the lender, the borrower can soon after buying the vehicle and before the expiry period, pay off the entire loan together with the agreed interest. And the lender cannot sue the borrower for a breach of the operation clause. … an accident or any misfortune … would nndoubtedly cause serious inconvenience, hardship, financial loss and even delay in the performance of the obligation to repay the loan.


In the instant case, the purpose of the loan was to purchase JAC Trucks for haulage of bauxite. The duration of the loan was for 12 months. The 1st Defendant took the loan on 22nd January 2013 and by the payment schedule was to have completed payment by 25th January 2014. The contract as in the case of the Barclays Bank case was for the Plaintiff to advance the money which it did and that of the 1st Defendant was to pay the money together with the agreed interest. The court in the Sakari case supra put it succinctly when it stated at page 646 thus:


Now what is the obligation created under this loan contract, a breach of which would entitle the other to sue? The obligation of the bank was to advance the money which it did and that of the Defendant was to repay the money together with interest if any. This is the obligation of the parties under the loan contract, and indeed almost all loan contracts. When a Bank lends money to its customer, the obligation of the customer is to repay the loan. If the loan is being sought for, let us say a business venture, and the business flops, resulting in massive financial loss to the customer, this misfortune, though may be due to no fault of this customer, does not change the obligation of the customer to repay the loan he has contracted for. He will still be obliged to fulfill his obligation. Thus the obligation of a borrower on a loan contract, as opposed to other types of contracts, is to repay the loan and not the performance of the purpose for which the loan was sought.


Therefore, it was for the 1st Defendant to repay the loan and not to rely on the proceeds from its business to fulfill its obligation under the contract. The 1st Defendant is liable to the Plaintiff for its failure to pay off its indebtedness.


The 2nd Defendant Executed a Guarantee Bond in which it as Guarantor “hereby affirm be incurred in favour of DALEX FINANCE & LEASING COMPANY by the Borrower during the period aforesaid, such amount together with any and all interest thereon to be paid in full not later than 60 days after demand. The Borrower and DALEX FINANCE & LEASING COMPANY have agreed that the Borrower can repay the loan earlier and pay interest up to the month the loan was paid. See paragraph 4 of the Guarantee Bond (Exhibit B3).


By paragraph 5 of Exhibit B3,


The Guarantor hereby undertakes to pay to DALEX FINANCE & LEASING COMPANY upon first written demand without cavil or argument any sum or sums within the limit of GH¢212,000.00 aforesaid together with an interest thereon at the agreed interest rate per month without DALEX FINANCE & LEASING COMPANY having to prove or show grounds or reasons for the sum specified therein.


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.


By the execution of the Guarantee Bond as part of the requirements for the facility granted to 1st Defendant by the Plaintiff, the 2nd Defendant would be liable to Plaintiff should the 1st Defendant renege on its obligations.


The learned authors of Chitty on Contracts (Common Law Library Series) 28th edition Volume 2 paragraph 44-014 the description of Performance Guarantee or Performance Bond or Guarantee Bond is given as:


….exceptionally stringent contracts of indemnity. They are contractual undertakings normally granted by banks to pay or repay a specified sum in the event of any default in performance by the principal debtor of some other contract with a third party, the creditor. The bank or other financial institution which grants a performance guarantee will of course demand a counter guarantee or indemnity from the customer at whose request the guarantee is granted. As the customer will be liable to reimburse the bank on their payment under the guarantee, and as he will be unable to prevent the bank from paying (except in cases of fraud) when demand is made on the bank, his position is clearly perilous.


So did the 2nd Defendant demand and obtain Indemnity from the 1st Defendant? The 2nd Defendant has produced Exhibits 10 and 11. Exhibit 10 is the same document tendered as Exhibit B3, the Guarantee Bond. It has been signed by DW1 who has told the court that she was not a Director of the 1st Defendant Company and therefore could not have signed anything binding the 1st Defendant Company. She has also told the court that she is illiterate and that the document was not explained to her in a language she understood before she signed.


In paragraph 15 of the 2nd defendants Statement of Defence and Defence to 1st Defendant’s Counterclaim, the 2nd Defendnat stated:********


In the 1st Defendnats reply ********


The 1st Defendnat should havce raised the issue of illiteracy and then gone on to lead evidence on same. It did not. It was circumscribed by its pleadings.


However, there was nothing in the pleadings which raised the question that 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 hi own cause or case by adducing evidence before the court syuch facts or evidence that will induce the determination to be made in his favour. A logincal 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 may win, the Defendant may lose. Such loss may be broght 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 Defendnat does not need to prove any defence and therefore does not need to lead any evidence may not always serve te best interest of the litigant even if he is a Defendant


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.


Exhibit B8 is the Customer Statement for 1st Defendant.  The total amount due as at 11th

June 2014 before the issuance of the writ was GH¢464,408.71. The 1st Defendant has denied this stating that payments were made as follows:


1. 3/5/2013      GH¢16,000.00

2. 30/9/2013    GH¢25,305.35

3. 14/10/2013  GH¢5,447.12

4. 24/10/2013  GH¢3,498.23

5. 7/4/2014      GH¢1,507.59



In Exhibit B3, all the payments 1st Defendant have made are reflected except that said to have been made on 7th April 2014 to the tune of GH¢1,507.59. The 1st Defendant has not provided evidence of payment of that which is not reflected in the statement of accounts.


Order 11 r. 12 of the High Court Civil Procedure Rules, 2004 CI 47 which deals with

Particulars of Pleading states:

(1) Subject to subrule (2), every pleading shall contain necessary particulars of any claim, defence or other matter pleaded including, but without prejudice to the generality of the foregoing words,

(a) particulars of any misrepresentation, fraud, breach of trust, wilful default or undue influence on which the party pleading relies; and

(b) where a party pleading alleges any conditions of the mind of any person, whether of any disorder or disability of mind or any malice, fraudulent intention or other condition of mind, except knowledge, particulars of the facts on which the party relies.


The Defendants however in their pleadings never stated that they were induced into signing any agreement or that pressure was brought to bear on them in signing the agreement. In Darbah v. Ampah (1989/90) 1 GLR 598, the court held that where fraud and duress were pleaded, particulars must be given. Consequently, where no particulars were given, it must be taken that no fraud or duress existed. In the instant case, the Defendants neither pleaded no particularized duress. 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.”


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.


Not having pleaded fraud in their defence, the Defendants do not have a leg to stand on in respect of this application.


The court refuses the application for stay of execution.


Costs of GH¢2,000.00 is awarded against Applicant.