DALEX FINANCE AND LEASING COMPANY LTD v. EBENEZER DENZEL AMANOR & ORS
2021
SUPREME COURT
GHANA
CORAM
- DOTSE, JSC (PRESIDING)
- APPAU, JSC
- PWAMANG, JSC
- DORDZIE (MRS.), JSC
- KOTEY, JSC
Areas of Law
- Corporate Law
- Tort Law
- Banking and Finance Law
2021
SUPREME COURT
GHANA
CORAM
AI Generated Summary
The Supreme Court, per PWAMANG JSC, addressed whether Huawei Tech. (Gh) S. A. Ltd could be held liable for the fraudulent acts of its Finance Manager, John Oseku Ankrah, which induced a non-bank financial institution to discount invoices and extend three loans to LGG Company Limited. The scheme involved fabricated purchase orders and confirmations, including countersigned letters directing payments to the plaintiff. The High Court mistakenly applied the Borrowers and Lenders Act, 2008 (Act 773), and the Court of Appeal focused on sections 140 and 143 of Act 179 to dismiss the plaintiff’s claim. Reframing the cause of action as deceit, the Supreme Court held Act 773 inapplicable; section 140(1) requires authorization for the specific matter, and the indoor management rule did not assist because no binding company transaction existed. Applying section 140(3) and scope-of-employment principles, the Court found the Finance Manager acted on a personal fraudulent frolic furthering LGG’s and the plaintiff’s interests, not Huawei’s, and dismissed the appeal.
PWAMANG JSC:-
My Lords, this appeal presents for our consideration the circumstances under which a limited liability company may be held liable on account of the fraudulent acts of its official. From the facts of the case, it is beyond doubt that John Oseku Ankrah, who at all material times was the Finance Manager of the 3rd defendant/respondent/respondent (the 3rd defendant), in his engagements with the plaintiff/appellant/appellant (the plaintiff), was acting a role in a choreographed performance put up to deceive and defraud unsuspecting third parties. The performance involved a number of conspirators and they succeeded in collecting an amount of about GHS6,539,612.00 from the plaintiff, a non Bank Financial Institution, as loans that have not been repaid. As is usual with this type of cases, the prospects of recovering the money from the fraudsters are dim so the court has been called upon to decide, between the plaintiff and the 3rd defendant, a big multinational telecommunications company, who ought to bear the loss.
THE FACTS
The scheme designed by the gang was this. Sometime about 10th May, 2012 the 1st defendant approached the plaintiff and presented to it some Local Purchase Orders, VAT Invoices and Waybills which showed that his company, the 2nd defendant, supplied telecommunication equipment to the 3rd defendant and was waiting payment. He told them he wanted to discount the invoices, an undertaking the plaintiff is into as part of its business. Supporting the documents was a letter on the letterhead of the 3rd defendant signed by John Oseku Ankrah, Finance Manager, confirming the order and stating that the items had indeed been received. The letter further stated, that as requested by the 2nd defendant, payment for the order would be effected to the joint names of the plaintiff and 2nd defendant. On receipt of the documents the plaintiff decided to verify their authenticity. Some officials went to the offices of the 3rd defendant in Accra and held a meeting with the Finance Manager in his office and he affirmed the transaction between the 2nd and 3rd defendants and the letter he signed. After that affirmation the plaintiff requested the 2nd defendant to formally apply for a loan. The 2nd defendant duly applied attaching all the documents and a loan for an amount of GHS2,317,112.00 was quickly processed and approved to be repaid within 180 days at monthly compound interest of 4.7%. The 1st defendant signed as the guarantor of the loan.
Howe