STANDARD CHARTERED BANK GH PLC vs UNITED STEEL COMPANY LTD
2022
HIGH COURT
GHANA
CORAM
- HER LADYSHIP, JANE HARRIET AKWELEY QUAYE (MRS.)
Areas of Law
- Banking and Finance Law
- Corporate Law
- Civil Procedure
- Property and Real Estate Law
2022
HIGH COURT
GHANA
CORAM
AI Generated Summary
In Ghanas High Court, Her Ladyship Jane Harriet Akweley Quaye (Mrs.) considered an application by a secured lender seeking a warrant for police assistance to evict occupants and realize a mortgage over a 30.477-acre Free Zones Enclave, Tema property registered with both the Bank of Ghana Collateral Registry and the Land Title Registry. The Respondent company, in liquidation, opposed on grounds that leave of court was a precondition under the Corporate Insolvency and Restructuring Act 2020 (Act 1015), alleged the mortgage was unperfected, and argued the application would subvert creditor decisions and prejudice other claimants. The Court found the mortgage perfected under Act 773 and later under the Lands Act, and acknowledged that secured creditors may sue. However, applying a purposive interpretation of Act 1015s liquidation framework, the Court emphasized the liquidators powers and debt-ranking priorities and held that enforcement under the Borrowers and Lenders Act 2020 (Act 1052) cannot override the insolvency regime. Balancing potential prejudice, the Court dismissed the application with no order as to costs.
This application was filed at the Registry of this Court on the 14th day of April 2022 against the Respondent for a warrant for police assistance to evict persons in possession of the property used as collateral by the Respondent and to realize the security interest in the property
Case of the Applicant
The Applicant granted the Respondent two banking facilities under which the Respondent created a security interest in its Collateral Property situate at Free Zones Enclave, Tema in favour of the Applicant. The Applicant registered its security interest at the Collateral Registry and also registered the mortgage at the Land Title Registry. The Respondent defaulted and remains in default of repayment per the credit agreement.
Upon the Respondent’s default, the Applicant in exercise of its right over the Collateral Property complied with all the legal requirements and obtained a Memorandum of No Objection from the Collateral Registry to realize its security interest in the Collateral Property. The Applicant has been unable to exercise its right of possession of the Collateral Property. In a supplementary application filed on 1st July 2022, the Applicant denied all the averments in the Affidavit in Opposition filed by the Respondent
Case of Respondent
The Respondent on the other hand argued in its Affidavit in Opposition filed on 14th June 2022 that the instant application is incompetent because the requirement of leave is a precondition to bring an action against a company in distress. They also argued that the current action is actuated by bad faith & malice as it undermines the decision of the Committee of Creditors which was chaired by the Applicant itself.
According to the Respondent, the Applicant is seeking to subvert the process of distribution and to frustrate the decision to liquidate the Respondent Company. Respondent further alleged that the Applicant failed to perfect its mortgage and therefore Act 1052 is inapplicable to their case. In a Supplementary Affidavit filed on 28th of June 2022, the Respondent argued that Applicant had admitted that the mortgage was not perfected (Exhibit ‘FA1’). Another Supplementary Affidavit filed on the 5th of July by Respondent which in summary states that the prejudice that would be caused other creditors should the application be granted far outweighs any prejudice arising from the refusal of the application.
Issues
1. Whether or not the application was filed without prior leave of the Court?
2. Whether