UNIVERSAL MERCHANT BANK LTD. v ABI CAPITAL FINANCIAL SERVICES LTD. & ANOR
2025
SUPREME COURT
GHANA
Areas of Law
- Corporate Law
2025
SUPREME COURT
GHANA
AI Generated Summary
The Supreme Court dealt with the appeal factored on multiple issues including the breach of fiduciary duties by the 2nd Defendant, the legality of the termination of his employment, and the recovery of consultancy fees paid erroneously. The Court affirmed that the 2nd Defendant breached his duties and the termination of his employment was lawful. The Bank was awarded damages and allowed recovery of the consultancy fee paid. The Court upheld the significance of adherence to company regulations and statutory obligations by directors. The legal framework and the need for compensation in cases of breach of fiduciary duties were reiterated.
TANKOAMADU JSC
INTRODUCTION
1. My Lords, it is settled company law and practice underpinning the principle of corporate governance that, Directors of companies stand in a fiduciary relationship with the Company. By that relationship, which has statutory support, directors are expected to, at all times, act in good faith and protect the lawful interest of the company. This obligation becomes more profound, when, the Director is in charge of the management and administration of the company.
2. The law however, eases the rigidity of doing business, and running the affairs of a company. Thus, a Managing Director who is one of the principal organs of a company is ordinarily vested with powers that allow for the efficient running of the corporation subject to the approval of the Board of Directors. In the event however that, these powers are deliberately abused in an inimical fashion, legal consequences arise resulting in personal liability of the Managing Director for the deliberate or reckless management of the company. Such a situation becomes more apparent where the Managing Director
JUDGMENT
engages in violations of statute, company policy or resolutions of the Board of Directors or of the Company in general meeting.
3. These observations are what characterise and inform our determination of the instant appeal. The 2 nd Defendant/Respondent/Appellant/Cross-Respondent (hereinafter simply referred to as 'the 2 nd Defendant') is a former Managing Director of the Plaintiff/Appellant/ Respondent/Cross-Appellant (hereinafter referred to as 'the Plaintiff') Bank. He was alleged to have abused his office to the benefit of the 1 st Defendant. In consequence, he was stripped of his employment status with the Bank. The Bank sought through proceedings at the High Court to demand damages and recovery of certain sums which the Bank claims to have been unlawfully deprived of. Whereas the trial court agreed with some of the Plaintiff's claims, the Court of Appeal reversed substantially that decision. Dissatisfied with the judgment of the Court of Appeal, the parties have appealed to the Supreme Court.
BACKGROUND
4. On 12 th May 2011, the Plaintiff, issued out of the Registry of the High Court a writ of summons and a statement of claim, claiming against the Defendants jointly and severally the following reliefs:
a. An order against the Defendant jointly and severally for the immediate repayment of GHC349,593.75.
b. Interest at the Plaintiff Bank prevailing com