IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
KUMASI - A.D 2016
FRANSTEL LIMITED - (Plaintiff)
MERCHANT BANK LIMITED - (Defendant)
DATE: 14TH MARCH, 2016
SUIT NO: TBFS/01/15
JUDGES: ANGELINA MENSAH-HOMIAH (MRS.) JUSTICE OF THE HIGH COURT
MICHAEL GYANG OWUSU FOR PLAINTIFF
ANDREW DANIELS FOR DEFENDANT
The Plaintiff Company commenced the instant action against the Defendant Bank on 03/10/06. By its amended writ of summons and statement of claim filed on 31/10/13, the Plaintiff claimed five reliefs, namely:
a. An order for recovery of cash the sum of four hundred and fifty million cedis ( ¢450,000,000.00) being monies the defendant demanded from the Plaintiff as a deposit for the opening of Letters of Credit for the Plaintiff for importation of sugar.
b. Interest on all monies payable to the Plaintiff at the prevailing bank rate from 1st December, 2004 to date of final payment.
c. Damages for breach of contract
d. Cash the sum of GH¢916, 976.02 being anticipated profit lost by the Plaintiff as a result of the defendant's breach of the contract to open Letters of Credit for the Plaintiff.
e. Cash the sum of $90,000.00 representing 3% of the contract sum of $3,000,000.00 the Plaintiff forfeited to Zar Limited as a result of the abrogation of that contract, which abrogation was occasioned as a result of the defendant's breach of contract to issue a letter of credit for the Plaintiff.
THE PLAINTIFFF'S CASE.
The plaintiff's case as gleaned from its amended statement of claim filed on 31/10/13, the Further Amended Reply filed on 28/04/14 and the evidence-in-chief of its Managing Director, Francis Amankwaa ( now deceased) is that it obtained a contract to supply sugar to some reputable institutions in Ghana. The Plaintiff, per its MD approached the Defendant and proposed its intention to import a ship load of sugar worth US$ 3,000,000.00, which the Bank agreed, but advised that the importation be done in tranches of US$ 500,000.00. Based on the Bank's advise, the first tranche of US$ 500,000.00 was approved for the Plaintiff on these conditions: (i) the plaintiff's MD was to provide payment guarantee to secure the entire US$ 500,000.00 worth of goods; (ii) he was also asked to pay 10% of the value of the letter of Credit which was C450,000,000.00( now GH¢45,000). The Plaintiff then obtained a loan of GH¢ 45,000.00 and a payment guarantee of US$ 500,000.00 from UT Bank in favour of the Defendant after which the Defendant opened the Letter of Credit. The loan from UT Bank attracted a compound interest of 6% per month and the payment guarantee was at the cost of 2% per month. However, the supplier informed the Defendant that it was not commercially viable to charter a whole ship and put only US$ 500,000.00 worth of sugar in it. Through an email correspondence (exhibit B), the Defendant verified from the Supplier the possibility of reverting to the US$ 3,000,000.00 order. Based on the suppliers advise, the Defendant agreed that the Plaintiff could order a full ship load of sugar worth US$ 3,000,000.00. At that point, the Defendant Bank requested the Plaintiff to apply for an amendment of the US$ 500,000.00 Letter of Credit to cover the US$ 3,000,000.00 which it did and approval was granted as per exhibit C. As a precondition for the US$ 3,000,000.00 L/C, the Plaintiff was to make a down payment of 10% of the face value which was US$ 300,000.00. The Plaintiff, acting through its MD communicated to the Defendant bank that it could not raise that money. That called for re-negotiations. The Defendant eventually agreed to use the earlier payment guarantee of GH¢45,000.00 and accept a landed property which belonged to a third party, Mr. Osei Bonsu. Upon receipt of Mr. Osei Bonsu's title documents, the Defendant conducted a search at the Lands Commission and obtained a report (exhibits E and F). Thereafter, the transaction fell through and the Bank failed to open the L/C.
It is also the Plaintiff's case that it lost anticipated profits as a result of the Defendant's failure to open the L/C. In the course of negotiating for the L/C, the Plaintiff said the Defendant directed it to Gibraltar Company Limited to do costing analysis. Exhibit G was tendered to show how the estimated profit was arrived at based on the Gibraltar Costing, i.e. they deduced all expenditure and the present selling price to arrive at the profit.
Further, the Plaintiff said per the agreement with its supplier, a 3% penalty was payable upon failure to open the L/C other than Force Majeure. Since the Defendant has failed to honour its side of the agreement to open the L/C, the Plaintiff has also breached the contract it had with its suppliers, making the Plaintiff liable to pay the UD$ 90,000.00. That apart, the Plaintiff said the GH¢45,000.00 it took from UT Bank at a compound rate of 6% per month has become a liability to the Company, as evidenced by exhibit J.
Concluding, the Plaintiff brought to the court's attention two correspondences between its former lawyer and the Defendant Bank as regards deductions made by the Bank on account of the Plaintiff relative to liabilities incurred in ordering the first tranche of US$ 500,000.00. These are exhibits K and L. The Plaintiff 's representative denied the Defendant's assertion that the decision to order the sugar in tranches was not based on the advice of the Defendant Bank and that the Defendant is not entitled to deduct any money on account of the Plaintiff.
During cross-examination, the Plaintiff's representative admitted that discussions on ordering the sugar in tranches were concluded before exhibit A was executed. He also admitted that in terms of exhibit 1, the Plaintiff's original supplier, Charles Ossa was unable to supply the initial 2100 metric tons of sugar. He however disagreed that the Plaintiff was unable to meet the preconditions in exhibit C in respect of the LC for US$ 3,000,000.00. He further indicated that after submission of the lease covering the landed property, the Bank failed to communicate its acceptance or rejection of the same but eventually made it known to the Plaintiff that it was doing business with another person. Upon a suggestion that the Defendant was not bound by the mortgage documentation provided by the Plaintiff, the Plaintiff's response was that once the Defendant invited the property owner to sign the mortgage deed which he did in the presence of a witness, the Defendant was bound by it. Again in cross-examination, the Plaintiff's representative admitted that the Plaintiff through exhibit 3 indicated its inability to pay the US$ 300,000.00. He also admitted that the Plaintiff has not yet paid the USD 90,000.00 to its supplier, ZAR Limited.
The Plaintiff called two witnesses. The first to testify was Nicholas Osei Bonsu (PW1) who told the Court that he indicated his preparedness to use his property as a third party security to satisfy a condition precedent requested by the Defendant Bank in the affidavit tendered as exhibit D. Apart from exhibit D, PW1 said he gave his lease to the Defendant and subsequently went to their premises where he was given seven documents to sign in respect of the said security, but the bank did not give him copies of the documents he signed.
Next to testify was Bernard Aboagye Kumi (PW2)who said he witnessed the documents which PW1 signed at the premises of the Defendant Bank in respect of the third party security provided by PW1. PW2 added that even though the Plaintiff met all the conditions for the grant of the L/C, a Manageress of the Defendant Bank by name Valerie said she was giving the facility to another person.
THE DEFENDANT'S CASE.
The Defendant Bank denied the Plaintiff's assertions that the decision to order the sugar in tranches was at its instance. Its version of the story as captured in its further amended statement of defence filed on 1//4/14 and the evidence-in-chief of its representative, Dacosta Owusu Duodu, is as follows: The Plaintiff had a borrowing relationship with the Defendant bank and on 16/11/2004, it applied for a 180- day deferred L/C for the importation of sugar. The Bank requested for 10% down payment in respect of the L/C of US$ 500,000.00. The L/C was opened but the supplier could not meet the supply to the borrower and as a result, the Plaintiff (borrower) came to the Bank for an enhancement of the L/C. In respect of the enhanced L/C, the Defendant's evidence was to the effect the Plaintiff did not meet the requirements of the new facility and that for a building to be used in lieu of cash, the request had to go to the Bank's credit committee for approval. Referring to exhibit K, the witness told the court that the Bank incurred charges to the tune of ¢254,938, 282.75 cedis in establishing the US$ 500,000.00 L/C in favour of the Plaintiff and as such, the Bank is entitled to deduct that amount on account of the Plaintiff. He explained that the deductions included charges taken by their correspondent bank and charges levied locally by the Defendant. Without the down payment of 10%, the witness said no transaction could have been initiated in respect of the US$3,000,000.00 L/C. He was however quick to admit that he joined the Defendant Bank in the year 2011 and the officer who was present when these transactions took place no longer works for the Bank.
Under cross-examination, the witness insisted that the Bank never advised the Plaintiff to order the sugar in tranches and that the bank does not involve itself in the underlying commercial transaction between a borrower and the supplier. He denied that the failure to complete the first transaction in respect of the US$ 500,000.00 L/C was the fault of the Defendant Bank. The witness conceded that exhibit G is a fraction of cost analysis done to determine the profitability of the venture the Plaintiff wanted to enter. As regards the third party security to be used by the Plaintiff in lieu of cash, the witness said it conducted a search to ascertain ownership of the property but never accepted the request made by the Plaintiff. He denied sighting any statutory declaration in respect of the third party security or any mortgage document related to it in the Bank's records. In conclusion, the Defendant denied any liability to the Plaintiff.
The issues for determination are as follows:
Whether or not the Plaintiff initially requested the Defendant to establish Letters of Credit for the importation of sugar valued at Three Million United States Dollars (US$ 3,000,000.00)?
Whether or not the Defendant advised the Plaintiff to rather import sugar valued at Five Hundred Thousand United States Dollars ( US$ 500,000.00)?
Whether or not the first transaction for the importation of sugar failed as a result of the advice given to the Plaintiff by the Defendant?
Whether or not the Plaintiff met the terms and conditions of the US$ 3,000,000.00 letters of Credit applied for?
Whether or not the Defendant informed the Plaintiff to put up a margin of 10% of the total letters of Credit Value i.e. US$ 300,000.00 before establishment?
Whether or not the Defendant accepted the deposit of the lease of landed property in lieu of deposit of cash in the sum of 10% of the total Amended Letter of Credit value?
Whether or not the Defendant cancelled the Amended Letter of Credit owing to failure of the Defendant to meet the conditions precedent for the establishment of the Amended Letter of Credit in the value of Three Million United States Dollars ( US$ 3,000,000.00)?
Whether or not the Plaintiff Directors resolved to request a loan of GH¢6,000,000.00 from the Defendant as they failed to meet the terms of the US$ 3,000,000.00 Letters of Credit/Loan facility?
Any other issues raised on the pleadings?
THE BURDEN OF PROOF.
This being a civil suit, the Evidence Act 1975, NRCD 323 requires that each party who makes a specific assertion or assertions, which are denied by his or her opponent, must lead convincing evidence to prove the assertions therein. By the provisions of section 12 (1) and (2) of NRCD 323, the standard required is proof by the preponderance of the probabilities. Indeed, from the earlier authorities such as Majolagbe v Larbi ( 1959) GLR 190 at 192 and Zambrama V Segbedzie (1991) 2 GLR 221; to the more recent ones like Yaa Kwesi v Arhin Davis(2007/08) SCGLR 580; Sarkodie v FKA Co. Ltd. (2009) SCGLR 65 holding 1 and Abbey v Antwi (2010) SCGLR 17 at 19 (holding 2), this standard of proof was applied.
In expounding this principle of proof in civil suits, Kpegah JA (as he then was) had this to say in the
Zambrama case, referred to supra:
"The correct proposition is that , a person who makes an averment or assertion, which is denied by his opponent, has the burden to establish that his averment or assertion is true. And he does not discharge this burden unless he leads admissible and credible evidence from which the fact or facts he asserts can properly and safely be inferred. The nature of each averment or assertion determines the degree and nature of that burden"
Looking at the pleadings in the instant case which are reflected in the issues set down for trial, the evidential burden as well as the burden of persuasion first rest on the Plaintiff. I will thus proceed to analyze the evidence on record and to determine whether the Plaintiff has been successful in discharging the burden placed on it by law in respect of each issue or issues taken together.
ISSUES AS TO THE PLAINTIFF'S REQUEST FOR A US$ 3,000,000.00 L/C TO BE OPENED IN HIS FAVOUR AND THE DEFENDANT'S ADVISE TO ORDER THE SUGAR IN TRANCHES OF US$ 500,000.00
These are the first and second issues set down for trial. Apart from the oral evidence adduced by the Plaintiff, there is no other documentary proof that the Plaintiff initially requested the Defendant to establish a US $ 3,000,000.00 L/C in its favour. The Defendant's representative denied this oral evidence in his evidence-in-chief, stating that the Plaintiff applied for US$ 500,000.00 L/C and the same was approved as per exhibit A.
In this case, exhibit A conflicts with the Plaintiff's oral account that it requested for a US$ 3,000,000.00 L/C to import 12,500 metric tons of sugar but was granted US$ 500,000.00 L/C to import the sugar in tranches upon the advice of the Defendant bank. The law is that the documentary evidence is to be given preference in such situations. The Supreme Court so held in the case of Yorkwa v Duah (1992-93) GBR 278 (holding 6) thus:
"Whenever there was in existence a written document and oral evidence over a transaction, the practice in the court was to lean favourably towards the documentary evidence, especially if it was authentic and the oral evidence conflicting. As between the conflicting and inconsistent oral evidence and the authentic exhibit 1 on the pledge, the court would lean favourably towards exhibit 1 that supports the case of the appellant that the transaction was a sale and not a pledge."
This was also affirmed in the case of Agyei Osae v Agyeifio (2007-2008) SCGLR 499 at 503 per Brobbey JSC.
The Plaintiff, acting through its Managing Director signed exhibit A. There is no doubt about the authenticity of exhibit A. And, in the face of the conflicts between the Plaintiff representative's oral account on the initial transaction with the Defendant and exhibit A, I accept the contents of exhibit A as a true reflection of whatever transpired between the parties leading to the grant of the US$ 500,000.00 L/C.
On the face of exhibit A, the Plaintiff, requested for a 180- day deferred Letter of Credit (L/C) and the same was approved by the Banking facility letter dated 16/11/2004. To be specific, the first paragraph of exhibit A reads:
We wish to advice that your request for facility from this bank has been approved as follows We further advise that the following terms and conditions shall govern the facilities granted:
$500,000.00 180 days letters of Credit: Five hundred thousand US dollars.
USA... " Purpose: For the importation of sugar from the
When the Bank advised the Plaintiff as per exhibit A above, it was up to the Plaintiff to accept or reject the same. However, by this documentary evidence, the Plaintiff company accepted the advice and the L/C for US$ 500,000.00 was subsequently established. The Plaintiff has failed to adequately prove that the Defendant advised the Company to order the sugar in tranches of US$ 500,000.00 at a time instead of 12, 500 metric tons worth US$ 3,000,000.00 which he allegedly requested for.
ISSUE OF THE FAILURE OF THE FIRST TRANSACTION IN RESPECT OF THE US$500,000.00.
This arises from the third issue, that is whether or not the first transaction for the importation of sugar failed as a result of the advice given to the Plaintiff by the Defendant?
The Plaintiff's account on this issue as per his evidence in court is that since the US$ 500,000.00 worth of sugar was too small, the supplier informed the Defendant bank that it was not commercially viable to charter a whole ship for that purpose. The Defendant on its part maintained that the failure is solely attributable to the Supplier and that it does not concern itself with such commercial details once the facility has been approved.
Exhibit B contradicts the Defendant's representative's evidence that the Bank does not involve itself in the commercial transactions of a customer after a facility has been approved and granted. Exhibit B is an e-mail from the Defendant's Manager, Corporate Centre, Kumasi by name William Amoafo. The e-mail dated 12/04/2005 was addressed to the Plaintiff's supplier at the time and the subject was RE: Sugar Contract with Franstel Ltd. It reads:
Dear Charles Ossa,
I do not think you are being fair to us. You have completely refused to answer any questions to do with time table and you expect us to do everything you want just like that.
If you cannot supply the 2100 metric tons due to shipment problems please be frank with us about it so we can immediately start work on the 12,500 metric ton shipment. These things are not done overnight. They need several approvals even to the Board level. So you need to be straight forward with us so we know what exactly to do.
Please supply us with the time table in your next response.
Then, on 13/04/2005, the said Charles Ossa replied as follows:
Dear Mr. Amoafo,
Please remove any expiration completely from the L/C, and leave it open.
The L/C cannot expire before it becomes active. Don't forget it is a deferred instrument with 180 days tenure
Reading exhibits A and B together, it can be reasonably inferred that the failure to supply the sugar worth US$ 500,000.00 was due to shipping difficulties on the part of the Plaintiff's suppliers. This position is further fortified by exhibit 1 which the Plaintiff wrote to the Defendant Bank on 13/09/2005. Paragraph 2 of exhibit 1 reads as follows:
“due to the inability of the original suppliers to deliver, we have secured an offer from another supplier with a new price of US$ 235/MT, bringing the total value for the consignment to US$ 2.937.500. The facility and L/C amount should therefore be amended accordingly."(emphasis added).
Before accepting exhibit A, the Plaintiff ought to have done due diligence. For instance, any prudent business person would have considered issues of shipment of the consignment before committing himself to the transaction. From the evidence adduced, it can also be inferred that the Plaintiff neglected to consider matters on shipment before causing the L/C of US$ 500,000.00 to be established. This dereliction of duty on the part of the Plaintiff is the basis for whatever financial loss it may have incurred when its supplier was unable to ship the consignment and I so find. The failure of the supplier to honour its part of the bargain can never be attributed to any advice given to the Plaintiff by the Defendant Bank.
ISSUES ON THE TERMS OF THE US$ 3,000,000.00 LETTER OF CREDIT AND THE DEFENDANT'S DEMAND FOR 10% DOWN PAYMENT.
The 4th , 5th and 6th and issues are linked and will thus be resolved together. These are:
(i)whether or not the Plaintiff met the terms and conditions of the US$ 3,000,000.00 Letters of Credit applied for?
(ii) whether or not the Defendant informed the Plaintiff to put up a margin of 10% of the total Letters of Credit Value i.e. US$ 300,000.00 before establishment? and
(iii) whether or not the Defendant accepted the deposit of the lease of landed property in lieu of deposit of cash in the sum of 10% of the total Amended Letter of Credit value?
In sum, the Plaintiff's evidence is to the effect that it met all the conditions for the new facility i.e. US$ 3,000,000.00 L/C after the Defendant Bank had caused PW1 to sign a mortgage deed over his landed property. PW1 has also confirmed signing a mortgage document after the Defendant Bank had satisfied itself that the property belong to him but failed to put the said document in evidence because he was not given a copy. If PW1 was satisfied that the Defendant had any such mortgage document in its possession, the Plaintiff ought to have taken steps for the Defendant to produce it for purposes of this trial. But that did not happen. What remains on record is the bare assertion of PW1 that he signed a mortgage deed which was witnessed by PW2. So, where is the mortgage deed?
The Defendant's version of the rival stories is that no mortgage deed was ever executed as per its records and that without the approval of the Bank's credit committee, landed property could never have been accepted in lieu of a cash deposit in this case, 10% of the L/C value which amounts to US$ 300,000.00. The Defendant's representative also testified that the Landed property was never accepted and that the Plaintiff never met the conditions of the new facility of US$ 3,000,000.00. Thus, the said L/C was not established.
At this point, i need to find out whose version of the rival stories is more probable. I will do so by taking into consideration the entire evidence on record and weigh the same by the preponderance of the probabilities as was held by Ansah JSC in Takoradi Floor Mills v Samir Faris (2005/2006) SCGLR 882 at 884 (holding 5).
The conditions of the new or enhanced facility of US$ 3,000,000.00 are contained in exhibit C. The relevant portion to the determination of the issues under consideration is clause 4 which states:
4. CONDITIONS PRECEDENT
Facilities would only be available for drawdown after the following conditions have been satisfied.
Acceptance of terms and conditions of banking facility letter
Payment of all appropriate fees upfront
Payment of 10% of the value of the consignment upfront, i.e. USD 300,000.00.
Collateral Management of goods to be imported.
All the terms and conditions under the Collateral Management arrangements are to be verified and confirmed as acceptable by the Bank.
Submission of Board Resolution in support of the borrowing.
Submission of completed Unlimited Joint and Several Guarantee of Directors
Submission of cash flow projections for the next twelve months.
It is not clear whether all the other conditions precedent were satisfied apart from the 10% cash deposit which is in issue. I would say that considering the totality of the evidence on record, the Plaintiff's position that the landed property was accepted in lieu of cash deposit is very doubtful for the reasons in the ensuing paragraphs.
First, the Plaintiff's representative was challenged on this ground during cross-examination by counsel for the Defendant on 23/03/2015. At pages 8 to 9 of the record of proceedings this was what transpired between the Plaintiff's Representative and Counsel for the Defendant:
Q. Were you able to meet the payment of US$ 300,000.00?
A. No. I was not able to meet the payment with explanation. I renegotiated with the Defendant that I could not raise US$ 300,000.00 but I have a property to offer as security or in lieu of the US$ 300,000.00 and they agreed.
Q. I am suggesting to you that you were never able to meet the terms imposed on you in terms of the letters of credit for US$ 3,000,000.00?
A. Not true. When I renegotiated, they accepted the offer and asked me to bring documents of the said house or property. They said I should bring the lease of the house, the valuation report on the house and also a statutory declaration because it was not mine. After giving them all these, they did a search on the property and called the property owner to their office to identify the lease and sign the mortgage deed. So I satisfied all that they required to open the US$ 3,000,000.00 L/C.
Q. Having submitted the Lease, the valuation report, the search report, the Defendant Bank did not approve of the mortgage documentation?
A. They did not correspond to me whether they have approved or not, but they were dragging their feet till I went to them to ask why they were behaving that way because it is left to them to open the L/C. They told me they got someone they were doing the same business with.
From the foregoing, it can be reasonably inferred that the Defendant Bank never communicated its acceptance of the third party security in the nature of a mortgage to the Plaintiff. Indeed, per exhibit 2 dated 04/10/2005, the Defendant Bank communicated in writing to the Plaintiff the following:
RE: REQUEST FOR AMENDMENT TO BANKING FACILITY
In response to your recent request for an amendment to the banking facility granted the
Company as per our facility letter dated August 31, 2005 we wish to advise the following:
The Letter of Credit (LC) amount request has been increased to USD 3million.
You are required to put up a margin of 10% of the total L/C value i.e. USD 30,000 before establishment.
The negotiation charges will be maintained at 1.5%
Kindly indicate your acceptance to the above by signing and returning to us the attached copy of this letter.
FRED OBOSU VALAERIE B. ASHITEY
(RELATIONSHIP MANAGER) (REG MGR/CORPORATE)
Two days later on 06/10/2005, the Plaintiff, acting through its Managing Director, Francis Amankwaa executed exhibit C indicating its acceptance of the terms therein. The terms included the 10% deposit of US$ 300,000.00. All along, the Bank has been clear on the US$ 300,000.00 so it is obvious that the US$ 30,000.00 quoted in exhibit 2 is an error on the part of the Bank.
At which point did the bank change its mind to accept the Plaintiff's request of using landed property as security in lieu of a 10% cash deposit in view of the fact that PW1 signed exhibit D on 03/01/2006 even though the document was prepared on 30/12/2005? Answers to this question are not forthcoming from the evidence adduced on behalf of the Plaintiff. But, the Defendant provided convincing proof of the fact that the 10% cash deposit remained key to the establishment of the said L/C as evidenced by a letter which the Plaintiff wrote to the Defendant Bank, exhibit 3. Exhibit 3 is dated 18/04/2006, i.e. three months after exhibit D had been executed. It reads:
"APPLICATION FOR A LOAN
The Directors of Franstel Ltd. hereby resolve at a meeting held on 18th April 2006 at H/No. OTB 583 Nsenie Road Adum Kumasi, that a loan of ¢600,000,000 ( six hundred million cedis) be secured from Merchant bank GH LTD to support the Company's sugar trade.
It has become necessary for us to apply for a loan of ¢600,000,000 (six hundred million cedis) to trade in sugar locally. This will enable us to offset the huge debt we have incurred as a result of importing sugar.
We have decided to support this loan with a property worth ¢1, 142, 800,000 ( one million, one hundred and Forty two million, eight hundred thousand cedis) located at Patasi.
It will be recalled that, your establishment tried to support our proposal for importing a ship load of sugar worth $ 3,000,000.00 of which we were given a facility on the 10th of October 2005. The 10% cash deposit e.g. ¢2,700,000,000 which was one of the conditions given to us has become difficult for us to provide. This has made the business stale. (emphasis mine)
The goodwill that your establishment had in us that enabled them support us all this while, is well appreciated and for us to continue working with you, hence this request.
We hope this request will meet your good recommendation.
FRANCIS AMANKWAA BEN OPPONG KYEI
(Managing Director) (Secretary).
On the basis of the above, I find that the Defendant Bank communicated to the Plaintiff the requirement to put up a margin of 10% of the total Letter of Credit value in respect of the US$ 3,000,000.00 L/C; the Defendant Bank did not at any point in time accept landed property in lieu of the cash deposit of 10% even though it conducted a search on a third party security as per exhibits E and F; and the Plaintiff could not pay the said 10% cash deposit which was a condition precedent for drawdown.
With these findings of fact, I conclude that the Plaintiff did not satisfy an essential condition precedent, among others for drawdown and so the Defendant Bank did not establish the L/C of US$ 3,000,000.00. Having arrived at this conclusion and bearing in mind the plaintiff's request for a loan of Six hundred million old cedis (¢600,000,000.00) as per exhibit 3, the 7th and 8th issues have become redundant.
Is the Plaintiff entitled to its claims against the Defendant? The first relief is for a refund of the sum of Four hundred and Fifty million Cedis (now GH¢ 45,000.00) which represents the cedi equivalent of the 10% deposit in respect of the failed US$ 500,000.00 L/C.
The evidence of the Defendant's representative is to the effect that the Bank deducted all requisite charges and paid the balance plus accrued interest to the Plaintiff. This was what he said in his evidence-in-chief:
Exhibit K is a letter from Merchant bank ( now Universal Merchant Bank) to K.A. Asante Krobea & Associates for a refund of ¢450,000.00 together with interest being 10% down payment for L/C establishment in favour of their client.
Exhibit L is a letter from Merchant Bank ( now Universal Merchant Bank) to K. A. Asante Krobea. The letter outlines the charges associated with the L/C that was established for customer. The total amount was C254, 938, 282.75 cedis (old currency). That is the total of the charges... The charges are charges taken by our correspondent bank in the US plus charges we have levied locally on the transaction".
The Witness further explained that the amount deposited plus the accrued interest came up to ¢478, 109, 589.04 old cedis and the total charges came up to ¢254, 938, 282.75 old cedis so the Defendant Bank refunded the difference of ¢223, 171,306.29 old cedis to the Plaintiff. In his view the Plaintiff is not entitled to a full refund. However, the Plaintiff maintains that it is entitled to a full refund.
The evidence of the Defendant's representative to the effect that a refund of ¢223, 171,306.29 old cedis has been made to the Plaintiff contradicts paragraph 29 of the Defendant's Further Amended Statement of Defence which reads:
Defendant avers that as at date hereof Plaintiff is entitled to only Two Hundred and Twenty Three Million, One Hundred and Seventy One Thousand Three Hundred and six cedis Twenty Nine Pesewas (GH¢223, 171,306.29) being the difference between the Four Hundred and Fifty Million Cedis Plaintiff lodged with Defendant as Ten (10%) percent cash deposit for the Five Hundred Thousand United States Dollars ( US$ 500,000.00) Letters of Credit established for Plaintiff plus Twenty Eight Million, One Hundred and Nine Thousand, Five Hundred and Eighty Nine Cedis and Four Pesewas ( ¢28, 109, 589.04) being accrued interest thereon less Defendant's charges in the sum of Two Hundred and Fifty Four Million, Nine Hundred and Thirty eight Thousand Two Hundred and Eighty two Cedis Seventy Five Pesewas ( GH¢254, 938, 282.75).
The law is that a party whose pleaded case contradicts his evidence on oath is not to be believed on that point. Thus, in Appiah v Takyi (1982-83) 1 GLR 1 at page 7 Mensah Boison J.A. had this to say:
“Where there is a departure from pleadings at trial by one party whereas the other's evidence accords with his pleadings, the latter's is, as a rule, preferable."
This principle was also applied in Zambrama v Segbedzie (1991) 2 GLR 221 and Yaa Semanhyia & Ors v Elizabeth Bih & Ors (2006) 5 M.L.R.G. 184 at 195 per Dotse J.A. ( as he then was).
In the face of the inconsistency as regards a refund made to the Plaintiff, i find that the Defendant Bank has not refunded any money at all to the Plaintiff. So, the question which remains unanswered is how much refund the Plaintiff is entitled to?
This takes me back to the facility letter in respect of the US$ 500,000.00 L/C. (exhibit A). Under the caption, PRICING, clause 4, the following are stated:
a. Interest rate
i) A total commission of 2.25% flat is chargeable on the facility.
b. Penal rate.
i) A penal rate of 9% p.a. would be charged on your accounts when they become irregular.
c. Other Charges
i) other charges, as per the bank's standard tariffs, would apply.
d. Variations in pricing
i) The Bank reserves the right to review/amend/alter its fees, commissions, interest rates, etc at its sole discretion, and in line with prevailing money market conditions, without notice to you."
The Plaintiff's representative executed exhibit A freely and with his eyes wide open. The terms in exhibit A as regards charges are therefore binding on the Plaintiff Company. The Defendant Bank itemized the charges against the Defendant's account in exhibit L as follows: L/C Commission; Arrangement Fee; Swift charge; Citibank Advising Charge; Citibank Confirmation charge; Citibank Amendment Fee; MBG Amendment Fee; and a Processing fee. Various amounts are indicated against each item in exhibit L.
The Amendment which the Plaintiff sought so as to raise the L/C value from US$ 500,000.00 to US$ 3,000,000.00 must be discussed. The Evidence on records shows that even though the Plaintiff signed the facility letter on 06/10/2006, it was not able to meet a condition precedent, i.e. 10% cash deposit. As such, the L/C of US$ 3,000,000.00 was never established. In any case, the Amendment charges which the Defendant seeks to impose on the Plaintiff date back to 25/1/2005 and 14/4/2005. The Defendant failed to satisfactorily convince this court that any specific amendment to the initial US$ 500,000.00 L/C was made either by itself or its corresponding bank. The evidence on record shows that even though the Plaintiff applied to amend the initial L/C of US$ 500,000.00, the enhanced L/C for US$ 3,000,000.00 was never established in its favour. What then did the Defendant and its corresponding bank amend so as to merit any amendment charges? I am unable to find answers to that from the evidence on record. Therefore, I find that the Defendant Bank is not entitled to those amendment charges.
Under the circumstance, I will allow the Plaintiff to deduct the following charges in exhibit L which I find to be legitimate relative to the L/C of US$ 500,000.00: (I) L/C commission of ¢113, 413, 387.50 old cedis ( now GH¢ 11, 341.34); Arrangement fee of ¢34,024, 016.25 old cedis ( now GH¢ 3,402.40); Swift charge of ¢250,000.00 old cedis ( now GH¢25.00); Citibank Advising Charge of ¢1, 365,250.00 old cedis now GH¢13, 652.5); Citibank Confirmation Charge of ¢47, 633,622.75 old cedis (now GH¢4,763.36) and a processing fee of ¢45, 500,000.00 old cedis (now GH¢4,500.00). The total charges allowed in the old cedis is ¢242, 186,276.5 (now GH¢ 24,218.63). When this is deducted from the 10% deposit of ¢450,000,000.00 old cedis (now GH¢45,000.00), the balance to be refunded to the Plaintiff is ¢207, 813, 723.5 old cedis (now GH¢ 20,781.37). The interest which the Plaintiff calculated as far back as August 2006 was not based on this figure. The Defendant Bank did not also lead any evidence as to the rate of interest which was applied to the fixed deposit of ¢450,000,000.00 old cedis. We are in the year 2016 and in my view, the Plaintiff is entitled to be paid reasonable interest on the refund to be made to it in view of the fact that the Company also borrowed money from UT bank to enable it deposit same with the Defendant. The Plaintiff is not entitled to be paid interest at the UT Bank rate because it was not the Defendant who compelled the Plaintiff to borrow money from UT bank to satisfy a condition precedent to drawdown. In the circumstance, the Defendant is to pay interest on the sum of ¢207, 813,723.5 old cedis ( now GH¢20,781.37) at the 91-day Bank of Ghana Treasury Bill Rate from January, 2005 to the date of delivery of Judgment. Further, the Defendant is to pay post judgment interest on the sum of ¢207, 813, 723.5 old cedis ( now GHS 20, 781.37) at the 91-day Bank of Ghana Treasury Bill rate from the date of delivery of Judgment till date of final payment.
From the totality of the evidence on record, the Defendant has not breached any contract between the parties which will entitle the Plaintiff to an award of general damages. The Plaintiff is also not entitled to any loss of profit. The claim for US$90,000.00 representing 3% of the value of the consignment which the Plaintiff said it has to pay to its supplier, ZAR Limited cannot also be granted in view of the fact that it was the Plaintiff which failed to fulfill a condition precedent for the L/C of US$3000,000.00 to be established.
Judgment is therefore entered in favour of the Plaintiff Company against the Defendant Bank in the sum of ¢207, 813, 723.5 old cedis ( now GH¢ 20,781.37) together with interest at the 91 day Bank of Ghana Treasury Bill Rate from January, 2005 to the date of delivery of Judgment and post judgment interest at the 91-day Bank of Ghana Treasury Bill rate from the date of delivery of Judgment till date of final payment.
This case has dragged on for years. It could have been easily settled through ADR by the parties, yet they chose to be in court. This has been a very expensive trial in terms of time and money, and above all, the demise of the Plaintiff's Managing Director. Having taken into consideration the provisions of Order 74 of C.I. 47 and the peculiar circumstances of this case, I award cost of GH¢3,000.00 against the Defendant and in favour of the Plaintiff's