NAOS HOLDINGS LTD. v. GHANA COMMERCIAL BANK LTD
1999
COURT OF APPEAL
GHANA
CORAM
- Forster, J.A. (Presiding)
- Benin, J.A.
- Afreh J.A
Areas of Law
- Civil Procedure
- Commercial Law
- Contract Law
- Evidence Law
- Banking and Finance Law
1999
COURT OF APPEAL
GHANA
CORAM
AI Generated Summary
The Court of Appeal, per Benin J.A., reviewed a High Court ruling that allowed plaintiffs to proceed by originating summons to seek construction of five promissory notes endorsed by Eaglet Corporation Limited after issuance by the defendants in favour of Sabat Motors Limited, and to prove their entitlement to payment and interest. The defendants’ affidavit alleged breach of an underlying funding and equipment-supply agreement with Claremont Group/Eaglet, total failure of consideration, repudiation by Sabat Motors, and plaintiffs’ mala fides and notice of defects. The High Court deemed originating summons appropriate but restricted proof of mala fides to documentary evidence. On appeal, the Court of Appeal held that substantial factual disputes—consideration, repudiation, timing of endorsement, and good faith—require viva voce evidence and cannot be resolved through originating summons. While promissory notes can be construed under Order 54A, construction would not dispose of the litigation here. The court allowed the appeal, set aside the High Court’s conclusions, struck out the originating summons, and indicated proceedings should be by writ under Order 2 Rule 1.
JUDGMENT
BENIN, J.A:
The question raised in the Court below was whether the originating process adopted by the plaintiffs in seeking redress of a grievance it had against the defendants was appropriate. The plaintiffs claimed to be the holders in due course of five promissory notes issued by the defendants in favour of a company called Sabat Motors to the order of Eaglet Corporation Limited. The plaintiffs came into the picture apparently because Eaglet Corporation endorsed the promissory notes in their favour, but which were dishonoured by the defendant upon presentation for payment on the due date. The plaintiffs went to the High Court by way of an originating summons seeking what happens to be the Court's construction of these instruments as to whether by them they were entitled to payment with interest at the current bank rate.
The defendants filed an application to strike out this originating process on grounds that there are several facts in dispute which make the process adopted "irregular, improper and constitutes an abuse of the process of the Court ...….” The facts alleged to be in dispute were set out in the affidavit in support of the application to which I shall make reference very shortly.
The plaintiffs opposed the application on the ground that they only sought the Court's construction of the documents and to determine the rights of the plaintiffs in relation to the said documents. The plaintiffs also provided rebuttal documentary evidence by way of affidavit annexures.
The trial court considered the facts and the law and ruled that the process adopted was “appropriate.” It went on to hold that “however, the defendants/applicants are permitted to prove the mala fides of the plaintiffs/respondents by providing the Court for its examination and consideration, any document that supports their allegation of mala fides, not that of Eaglet/Claremont or any other person, at the hearing of the Summons.”
The material facts raised by the defendants are contained in their affidavit in support of the application to strike out the summons. These are:—
“5……..the issuance of the promissory notes by Sabat Motors Limited ……. was made in flagrant breach of a contract dated 5th January, 1990 between Sabat Motors Limited and Eaglet Corporation Limited., the European affiliate of an American off-shore financier, Claremont Group Limited which was to provide funding for Sabat Motors Limited to acquire certain equipment.
6. That in consideration of the cr