JESCAN CONSTRUCTION LTD. v. HIPPO LIMITED & ANOTHER
2015
COURT OF APPEAL
GHANA
CORAM
- OWUSU, J. A (PRESIDING)
- OFOE, J.A.
- TORKORNOO, J. A.
Areas of Law
- Contract Law
- Civil Procedure
- Commercial Law
- Banking and Finance Law
2015
COURT OF APPEAL
GHANA
CORAM
AI Generated Summary
The case involves an appeal against a trial court’s dismissal of an application for summary judgment regarding payment guarantees issued by Merchant Bank (the Bank) for construction contracts involving the Plaintiff Respondent (Respondent) and the 1st Defendant/Appellant (Appellant). The project manager had terminated the Respondent's contract for non-performance. The Appellant called upon the Bank to pay the amount guaranteed, which led the Respondent to seek an injunction against this. The trial court dismissed the application for summary judgment, leading to the current appeal. On appeal, the court held that the Bank must honor the unconditional guarantees without consideration of disputes between the contractor and client. The appeal was upheld, granting judgment in favor of the Appellant for the claims related to the performance guarantees.
TORKORNOO, J. A
This is an appeal against a ruling dismissing an application for summary judgment against Merchant Bank (referred to as the Bank hereinafter). The Plaintiff Respondent (referred to as Respondent hereinafter) in this appeal was employed as a contractor to construct two warehouses and other facilities in two lots for the 1st Defendant /Counterclaimant/Appellant (Appellant) valued at a total figure of GH¢4, 000, 000. 00. The contract period for the warehouses and other facilities was September 2011 to March 2012 and September 2011 to January 2012 respectively.
The contract required that the contractor provide advance payment guarantees for mobilization payments given to the contractor.
The contractor was also to provide performance securities for the due execution of the contracts.
Two advance payment guarantees were issued by the Bank on 5th September 2011 in support of the Contractor.
These guarantees were in the sums of GH¢227, 317. 93 and GH¢468, 682. 07 respectively and were to expire on 4th July 2012 and 4th September 2012 respectively. (See pages 23 to 26 of the Record of Appeal.
Two performance guarantees were also issued on 5th September 2011 in the sums of GH¢125, 658. 96 and GH¢274, 341. 00 respectively and were to expire by 4th July 2012 and 4th September 2012 (pages 192 to 195 of the ROA). On 2nd February 2012, the project manager terminated the respondent’s contract for‘non performance, mismanagement and an uncooperative attitude by the contractor’. The project manager certified that the Respondent owed the Appellant GHC 300, 705. 83 as the difference between work executed and the advance and supplementary loans given to the contractor (page 34 of the ROA). On March 14 2012 the appellant called on the bank to pay the determined sum of GH¢300, 705. 83 being part of the sums secured on the advance payment guarantee(page 88 of the ROA). The Rspondent’s reaction to the call on the bank was to sue in the High Court for an injunction to restrain the Appellant from calling on the guarantees.
After entering appearance, the Appellant filed a Defence and Counterclaim.
In the heading of the Statement of Defence and Counterclaim, the Appellant set out two titles – the original title of the suit commenced by the Respondent, and the title of a counterclaim action it commenced with the Appellant as Plaintiff on one hand, and the Respondent, one Kimathi Dake and the bank as Defendants on the other hand.
The caption of the process was ‘S