The Supreme Court yesterday dismissed a $60 million judgement debt entered against the National Investment Bank (NIB) by the Commercial Division of the Accra High Court in February 2013.
The dismissal followed an appeal by the bank, challenging the decision of the High Court, which was upheld by the Court of Appeal in October 2015
Interest on the amount, per the High Court judgement, was 11 per cent, with effect from January 29, 2009 till the date of final payment.
The High Court’s decision was as a result of a legal action against NIB by Standard Bank Offshore Company Limited (substituted later by Dominion Corporate Trustees Limited) on behalf of certain investors who purchased promissory notes issued by Eland Ghana Limited and allegedly guaranteed by NIB.
But in a unanimous decision yesterday, the five-member panel of the Supreme Court, presided over by the Chief Justice, Ms Justice Sophia Akuffo, held that both Standard Bank Offshore Company Limited and Dominion Corporate Trustees Limited had no capacity to initiate the action which resulted in the $60 million judgement.
The court, therefore, nullified all proceedings in relation to the case that took place at the High Court and the Court of Appeal, as well as the judgements given by the two courts.
It further granted cost of GH¢500,000 against Dominion Corporate Trustees Limited.
In March 2010, Standard Bank Offshore sued NIB at the Accra High Court on behalf of certain investors who purchased promissory notes issued by Eland Ghana Limited and allegedly guaranteed by NIB.
Under the terms of the transaction, the investors had to pay a discounted total sum of US$45 million in May 2007, and upon maturity of the promissory notes on January 29, 2009, reap US$60 million, thereby earning US$15 million in profit.
During the trial, NIB led evidence to show that its Managing Director at the time, Mr Daniel Charles Gyimah, signed the guarantee without any authorisation from the board and said, indeed, the transaction was known only to Mr Gyimah.
The bank also led evidence to show that the US$45 million was not utilized for the advertised purpose but was rather distributed by Mr Gyimah to Eland Ghana Limited and companies connected to it.
But the court, presided over by Mr Justice Amadu Tanko, in its February 21, 2013 judgement, held a contrary view; declared NIB liable and ordered it to pay the $60 million, with 11 per cent interest, with effect from January 2009 till the day of final payment.
Not satisfied with the decision, NIB appealed to the Court of Appeal, but on October 15, 2015, the court dismissed the appeal and upheld the decision of the High Court.
The bank then filed an appeal at the Supreme Court on October 21, 2015.
Giving reasons on the lack of capacity, Mr Justice A.A Benin, who read the Supreme Court’s decision, explained that both Standard Bank Offshore and Dominion Trustees failed to disclose the requisite details of the investors who they represented during the lawsuit.
According to the court, the two companies breached court rules by failing to disclose the identities and jurisdictional addresses of the investors who bought the promissory notes.
The rule, it explained, was essential in the identification of real plaintiffs and also prevented an imposter from initiating a legal action and benefiting from that action.
The apex court held that failure by the two entities to comply by the rule meant that they lacked the locus to initiate the action and, therefore, their writ which led to the judgement debt was void.
“It is essential for the plaintiff to disclose who they represent,” the court said.
The Supreme Court was also of the view that Dominion Trustees or Standard Bank Offshore acted as trustees or registrants of the investors, which was not the same as owners of the promissory notes.
“Neither Standard Bank Offshore Limited nor Dominion Corporate Trustees Limited can, therefore, claim to be the owners of the promissory notes,” it said.
In his reaction, the Managing Director of NIB, Mr John Kweku Asamoah, described the decision of the court as a victory for the bank and all of its stakeholders.
“The highest court of the land has spoken. The case has really affected the operations of the bank for the past seven years, but our stakeholders must now be very confident in dealing with NIB because the case is over,” he said.