UNION SAVINGS AND LOANS LTD v. DREAM FINANCE LTD
2016
HIGH COURT
GHANA
CORAM
- HIS LORDSHIP ERIC KYEI BAFFOUR JUSTICE OF THE HIGH COURT
Areas of Law
- Commercial Law
- Contract Law
2016
HIGH COURT
GHANA
CORAM
AI Generated Summary
This case revolves around a financial dispute where the borrower, after converting an investment into a loan secured by a property, failed to meet the conditions for disbursement. Despite this, the lender registered the loan and obtained a possession warrant. The court dismissed the borrower's application to set aside the warrant, upholding the principles of novation and severability and declaring the original investment amount to be a loan.
RULING
On the 2/12/15 the court granted an application filed by the Lender/Respondent herein on a motion for the possession of H/N Plot No 340 Trasacco Valley Estates, Accra under section 34(2) of the Borrowers and Lenders Act, Act 773. The applicant herein was served with the application but failed to appear before the court. It is the grant of the application for a warrant for the possession of the said property that has ignited the present application wherein the borrower/applicant seeks to set aside the grant of the warrant.
To fully appreciate the principles that will govern the grant or refusal of this application it would be useful to set out the background facts that has led to this present application. The lender in August 7, 2014 made an investment placement with the borrower/applicant in the sum of Gh¢5.000.000.00. The lender sometime later made a demand for those sums of monies deposited as investment capital with the borrower/applicant. Instead of their monies being paid back to them, the borrower/applicant rather asked for a loan of Gh¢5.000.000.00 for a two year period to use as a working capital. This was agreed to and accordingly the investment amount which had accrued interest and the requested loan amount of Gh¢5.000.000.00 were both consolidated as a loan per an offer letter dated the 23rd April, 2015.
As part of the conditions for the disbursement of the loan of Gh¢5.000.000.00 the borrower/applicant was required to meet certain conditions precedent including the provision of shareholder’s guarantee as well as directors’ personal guarantee. Security in the form of a property situate at Trasacco Valley was used as the mortgage property. The lender proceeded to effect the necessary registration of the loan and the use of the property as security under the Borrowers and Lenders Act, Act 773 of 2008.
Notwithstanding the registration of the loan and the mortgage property by the lender, the lender did not disburse the amount of Gh¢5.000.000.00 for what it termed as the failure of Dream Finance, that is the borrower, to furnish it with the “Directors Personal Guarantee and the Shareholders’ Personal Guarantee being part of the conditions precedent to the release of additional funds”.
It admits of little controversy that without the anticipation of the release of an amount of Gh¢5.000.000.00 the offer letter and the mortgage agreement would not have been signed between the parties. So therefore if the two agreements have been signed but t