MERCHANT BANK (GHANA) LTD v. GHANA PRIMEWOOD PRODUCTS LTD.

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;

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(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