MERCHANT BANK (GHANA) LTD v. GHANA PRIMEWOOD PRODUCTS LTD.
1990
SUPREME COURT
GHANA
CORAM
- SOWAH C.J.
- ADADE
- WUAKU
- AMUA-SEKYI JJ.S.C.
- LAMPTEY J.A
Areas of Law
- Commercial Law
- Contract Law
- Civil Procedure
1990
SUPREME COURT
GHANA
CORAM
AI Generated Summary
Ghana Primewood Products Limited defaulted on loans secured from Merchant Bank, leading to a legal dispute. The parties reached a settlement requiring the company to pay 60 million by the end of 1987, which the company claimed to have met by including credits from the Bank of Ghana. Both the High Court and the Court of Appeal ruled in favor of the company, but their rulings were overturned by the Supreme Court. The Supreme Court found that the credits should be considered payments towards the 60 million obligation and upheld the originally agreed interest rates and charges, rejecting the statutory interest rate argument. The Supreme Court emphasized that original contractual terms continue to apply unless explicitly modified by a judgment.
JUDGMENT OF ADADE J.S.C.
Adade J.S.C. delivered the judgment of the court. On 25 April 1990 we allowed this appeal and made some consequential orders. But we reserved our reasons which we now give.
By a debenture (exhibit MBA) and a deed of mortgage (exhibit MBB) both dated 8 February 1983 the Ghana Primewood Products Limited, hereinafter referred to simply as the company, charged their floating and fixed assets to secure the repayment of certain loans and other bank facilities given them by the Merchant Bank (Ghana) Ltd., hereinafter referred to as the bank. The company found difficulty in meeting payment deadlines. By 26 September 1986 the company's account stood at ¢78,705,838.32 debit, plus a guaranteed facility of Export Credit Guarantee Department (E.C.G.D.) bills of £1.2 million sterling in respect of which there [were] still bills to mature to the tune of £328,760.67." At the time of the summons in October 1986 it was alleged that interest continued to accrue to all outstanding debts at the then current rate of twenty and half per cent per annum, with a penalty rate of one per cent per annum. A statement of the account as at 26 September 1986 was annexed to the summons as exhibit MBC.
As a result of the company's failure to honour its obligations under the deed of mortgage and the debenture, the bank took out an originating summons to enforce their rights as they were empowered to do under sections 27 and 240 of the Companies Code, 1963 (Act 179) and section 27 of the Mortgages Decree, 1972 (N.R.C.D. 96).
After the company had appeared to the summons, and filed their defence, the parties decided to settle the matter. The agreed terms of settlement were filed in court on 9 February 1987. The terms were as follows:
"TERMS OF SETTLEMENT
1. That in respect of the following sums which now are or shall be payable by the defendants to the plaintiffs that is to say:
(a) the debit outstanding as at the date of this action: ¢78,705,830.32;
(b) the debit balance on the receiver and manager's account: ¢7,396,932.90;
(c) accrued interest and penalty on (a) and (b) above: ¢7,577,322.04;
(d) the cedi equivalent of future E.C.G.D. bills totalling £218,399;
[p.555]
(e) future repayment instalments under Bank of Ghana soft loan totalling ¢15,892,326.40; and
(f) accruing interest and penalty on (a) to (e) above: the defendants shall pay to the plaintiffs during the 1987 calendar year, a minimum of ¢60 million in the following manner:
(i) a minimum