CAL BANK LIMITED VS SOTREC GHANA LIMITED & 2 ORS
March 21, 2016
HIGH COURT
GHANA
CORAM
- HIS LORDSHIP JUSTICE GEORGE BUADI J.
Areas of Law
- Banking and Finance Law
- Contract Law
- Evidence Law
- Civil Procedure
- Property and Real Estate Law
March 21, 2016
HIGH COURT
GHANA
CORAM
AI Generated Summary
In the High Court (Commercial Division 5), Accra, Justice George Buadi adjudicated a dispute between a Ghanaian bank and its customer, Sotrec e2 ac f4 the first defendant company e2 ac f4 together with its directors as guarantors. The bank had granted a GH a2100,000 overdraft on 6 February 2007 at its base rate plus 3.5% margin, secured by mortgages over commercial properties at Osu and McCarthy Hill and director guarantees; at defendants e2 ac ¢ request, balances of affiliates Sotrec Groceries Limited (SGL) and Sotrec Meat Limited (SML) were debited to the first defendant. While the suit was pending, court-appointed auditors issued Exhibit CW2 fixing the defendants e2 ac ¢ indebtedness at GH a21,092,307.34 and the bank e2 ac ¢s indebtedness to defendants at US$15,098. Applying evidence rules, corporate personality, and limitation principles, the court dismissed the counterclaim as unproven and time-barred, entered judgment for the bank with contractual interest, and awarded defendants US$15,098 with dollar-denominated simple interest from July 2012. The court acknowledged sale of the Osu property and ordered, in the alternative, judicial sale of the McCarthy Hill factory.
Introduction The plaintiff is a body corporate engaged in the business of banking.
1st defendant is a customer of the plaintiff bank.
Following default of due repayment of credit facilities the bank claims to have granted 1st defendant upon mortgage security guarantees provided by 2nd and 3rd defendants, the bank by a writ of summons filed in 2 March 20111 claims against defendants jointly and severally the following reliefs: (a) Recovery of the sum of GH¢1, 092, 307. 34 being Defendants’ indebtedness to Plaintiff as at 1st June 2013(b) Interest on said GH¢1, 092, 307. 34 at the Plaintiff’s base rate plus 3. 5% margin per annum from 2nd June, 2013 till date of final payment(c) An order for Judicial Sale of 1st Defendant’s properties situate at Christianborg, Osu, Accra and meat processing factory situate at McCarthy Hill, Accra.
2 Plaintiff’s case The bank’s claim is that on or about 6 February 2007, it granted 1st defendant company, a twelve-month period overdraft facility of GH¢100, 000 to augment its working capital.
The facility was to attract interest at the bank’s base rate plus 3. 5% margin per annum subject to change at the plaintiff’s option.
As security for repayment of the facility, 1st defendant executed a deed of mortgage over its commercial properties at Osu, and McCarthy Hill, all in Accra to the bank.
Beside the mortgage, 2nd and 3rd defendants, as directors of 1st defendant company provided further security by executing a Guarantee to be personally liable in the event of 1st defendant’s default in repayment of the facility The bank claims that it obliged 1st defendant’s request for closure of accounts of its affiliate companies - Sotrec Groceries Limited (SGL) and Sotrec Meat Limited (SML), and to debit their respective debit balances to the accounts of 1st defendant.
The bank claims the period for repayment of the facility has expired, and that despite repeated demands, defendants have failed or refused to repay their indebtedness.
The bank states that as of 1 June 2013, defendants’ indebtedness to the bank stood at GH¢1, 092, 307. 34. 3 Defendants’ case By their amended statement of defense, defendants do not deny the crux of plaintiff’s claims. Defendants admit to have secured the facility at the stated date and for the stated purpose, as well as at the agreed rate of interest. Defendants also admit to have executed the mortgage facility over their commercial properties at Osu and McCarthy Hill, Accra.
They admit further that 2