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As the title
of the case shows, this is a
consolidated case in which the
pleadings of three (3) cases
disclose the main protagonist
being the Plaintiff, NDK
Financial Services and Glico
Genera! Insurance Company
Limited ("Glico"). The 1st
Defendant in Suit No. BFS/227/09,
Harold Ntorinkansah, is a
Director, together with his
wife, Millicent Ntorinkansah, in
the 1st Defendant Companies.
Addicent Foods Ltd and Hansas
Complex Ltd in the other two (2)
suits numbered BFS/228/09 and
BFS/344/09. In the three (3)
cases, Plaintiff is seeking an
order for the recovery of the
sums of GH¢417,842.39; GH¢1,095,730.76;
and GH¢192,539.71 respectively,
being the balances due and owing
on the credit facilities
extended by Plaintiff to the
said Defendant Companies,
together with interest at the
agreed interest rate. Plaintiff
is also seeking, in all the
three cases, costs including
legal fees. Again, in all three
cases the 2nd Defendant, Glico,
has counterclaimed as follows:
(a) Stilt no. BFS/227/09; "I. A
declaration that the credit
guarantee bond number GG/BON/08-00237
dated 22nd October 2008 issued
by Derek. F. Amoah in the name
of the 2nd Defendant is legally
unenforceable and void on the
grounds of fraud and collusion
among the Plaintiff, 1st
Defendant and Derek F. Amoah.
(b) Suit no. BFS1228109 "I. A
declaration that the credit
guarantee bond number GG/BON/08-00236
dated 22nd October 2008 issued
by Derek F. Amoah in the name of
the 2nd Defendant is legally
unenforceable and void on the
grounds of fraud and collusion
among the Plaintiff, Harold
Ntorinkansah hiding behind the
1st Defendant and Derek Amoah".
(C). Suit no. BFS/344/09 "I. A
declaration that the credit
guarantee bond dated 2nd October
2008 issued by Derek F. Amoah in
the name of the 2nd Defendant is
legally unenforceable and void
on the grounds of fraud and
collusion among the Plaintiff,
3rd Defendants and Derek F.
Amoah." Glico is also
counterclaiming for the
following: "ii. Punitive damages
against Plaintiff for fraud
and/or collusion, iii. An order
directed at Bank of Ghana to
sanction the Plaintiff for
statutory infraction. iv. Costs,
including lawyer's fees. The
case of the Plaintiff is that
all the Defendants, excluding
Glico and Millicent Ntorinkansah
applied for short term credit
facilities and in suit nos. BFS/227/09
and BFS/228/09, Glico, as a
condition for the grant of the
facilities, issued credit
guarantee bonds to repay the
loans upon failure of the
Defendants to pay the said
loans. In suit no. BFS/344/09 by
the same request Glico issued
another credit guarantee bond
offering to pay the facility
granted the 1st Defendant in
case of default. In respect of
this case Ntorinkansah and the
wife also issued a guarantee for
payment of this loan in case of
failure by the Defendant, Hansas
Complex, to pay the loan. In all
the cases there was failure to
repay the loans to the
Plaintiff. As expected the
Plaintiff sued the Defendants in
the respective cases in a bid to
retrieve the loans. It was
during the processes to recover
the loans that Glico denied any
knowledge of the credit
guarantee bonds issued by its
General Manager Mr. Derek Amoah
alleging fraud and collusion
between NDK, the said Defendants
and Glico's General Manager, Mr.
Derek Amoah. The other
Defendants (i.e. with the
exception of Glico) failed to
deliver a defence, whereupon on
the application of the
Plaintiff, the court entered
final judgment against the said
Defendants for the reliefs
endorsed on the Writ of Summons.
From the pleadings and the
evidence adduced, the act that
the loans were granted in
respect of all the cases does
not appear to be in dispute.
Neither is the fact that the
facilities so granted have not
been paid back to Plaintiff. In
my opinion, the main issue for
determination is whether Glico
knew of the bonds issued by
Derek Amoah and if they did not
know whether they should be
bound by the act of Mr. Amoah in
issuing the bonds in the name of
Glico. Very important also will
be the need to determine the
issue whether there was
collusion by NDK in getting the
bonds when they dealt with Mr.
Amoah. The subject matter of the
dispute in the instant suits is
credit guarantee bonds
purportedly issued by Glico.
These are contracts of guarantee
and this is what Romer L.J had
to say about contracts of
guarantee in the case of Seaton
v Heath [1899] 1 QB 782 (CA):
"...I desire to make some
remarks upon the question of
general importance raised in
this case with reference to the
contract of insurance or
guarantee. There are some
contracts in which our Courts of
law and equity require what is
called 'uberrima fides' to be
shewn by the person obtaining
them, and, as that phrase is
short and convenient, I will
continue to use it. Of these,
ordinary contracts of marine,
fire, and life insurance are
examples, and in each of them
the person desiring to be
insured must, in setting forth
the risk to be insured against,
not conceal any material fact
affecting the risk known to him.
On the other hand, ordinary
contracts of guarantee are not
amongst those requiring 'uberrima
fides' on the part of the
creditor towards the surety; and
mere non-communication to the
surety by the creditor of facts
known to him affecting the risk
to be undertaken by, the surety
will not vitiate the contract
unless there be fraud or
misrepresentation, and
misrepresentation may be made by
concealment." (Emphasis mine) By
virtue of the authority
therefore, there is n.
requirement of It uberrima'fides"
on the part of Plaintiff herein.
However, Glico is also relying
on an. allegation of fraud to
vitiate the contracts of
guarantee. It is trite learning
that fraud vitiates everything.
The position of the law with
regard to the burden of proof is
succinctly stated in the case of
Ababio v. Akwasi III [1994 -95]
Ghana Bar Report Part 2, 77 per
Aikins JSC; that it is the party
who raises in his pleadings an
issue essential to the success
of his case who assumes the
burden of proving it. The burden
only shifts to the defence only
to lead sufficient evidence to
tip the scale in his favour when
on a particular issue the
Plaintiff leads some evidence to
prove his case. If the Defendant
succeeds in doing this, he wins,
if not he loses on that
particular issue It is trite
learning that if a defendant
counterclaims, the standard of
proof required to prove the
counterclaim is just like that
of a plaintiff. In the instant
case the 2nd Defendant, GIico is
alleging that its General
Manager, Mr. Amoah, who...issued
the bonds (the contracts of
guarantee) in question had no
authority to do so, and that the
bonds were procured by fraud.
The onus was on Glico to prove
what it alleged; firstly, that
Mr. Amoah acted ultra vires his
power and position at Glico, and
therefore Glico cannot be held
liable for the obligations under
the credit guarantee bonds.
Glico is contending that 'Mr.
Amoah issued the credit
guarantee bonds Without
authority in spite of the fact
that all the bonds in question
(Exhibits "E", 'T', "1", "8" and
20" were signed by Mr. Amoah
purportedly on behalf of Glico,
and also that they bore the
official seal Of Glico, which
seal was in the custody of Mr.
Amoah. The evidence of Mr. Kwame
Acheampong-Kyei, Chairman of
Glico General Insurance Company
was that the first time the
Company got to know about the
bonds was when their attention
was drawn to the instant suits.
His further evidence was that
Mr. Amoah was only a General
Manager and the structures in
place at Glico demanded that he
wrote a memo to seek approval of
any business of any dimension
beyond the approved levels of
business that Glico General
underwrites. According to Mr.
Acheampong-Kyei Mr. Amoah was
the General Manager and Mr.
Fokuo-Kyei was the Chief
Executive Officer, and as
General Manager Mr. Amoah had to
report to and take instructions
from Mr. Fokuo-Kyei. Mr. Amoah
also reported to the Board
Technical and Business
Committee. Mr. Acheampong-¬Kyei
denied ever introducing Harold
Ntorinkansah to Mr. Amoah for
special or preferential
treatment. The Plaintiff denies
Glico's claims. Plaintiffs case,
as supported by the evidence of
Robert Kittoe, Head of Loans
Recovery (P.W.1), was that the
Defendants in question were
required, as a condition for the
approval of the facilities
granted them, to provide
security. Harold Ntorinkansah,
Addicent Foods Ltd and Hansas
Complex provided as security
credit guarantee bonds issued by
Glico and signed by Derek Amoah
(P.W.3) as the General Manager.
The Plaintiff's case is that as
far as they were concerned, they
dealt with the General Manager
of Glico who happened to be
Derek Amoah. They did not have
any reason to believe that Derek
Amoah did not have the mandate
of the company (Glico) to issue
the bonds. Mr. E.K. Aminarh,
(P.W.2) Head of Credits of
Plaintiff Company's evidence was
that the practice in Plaintiff
Company is that when such credit
guarantee bonds are presented to
them, they pick the bond numbers
on the documents, call the
insurance company and ask to
speak to the officer who issued
the bonds. They make an
appointment to go and see the
officer to authenticate the bond
documents to be sure they are
indeed dealing with the officer
who issued the bonds. Mr. Derek
Amoah was subpoened by Plaintiff
to come to Court to testify. The
gist of his evidence was that
since 2005 when the 2nd
Defendant Company commenced
operations, he has been the
General Manager. He said that
per the organizational structure
of Glico, there was supposed to
be a Managing Director and three
General Managers but since
inception he had served as a
General Manager who was
performing the duties of a
Managing Director. He said he
was the final authority as far
as Glico General Insurance
business went, even though there
was an Executive Director who
signed cheques for the Company.
Mr. Amoah's further evidence was
that as the technical person in
charge of the Company at the
time, he usually looked at each
case on its own merit and: then
took a decision. In the case of
the Defendants herein however,
the decision was based on the
instruction given to him by the
Chairman. He testified that the
said Ntorinkansah was introduced
to him by the Board Chairman to
do business with; and therefore
he was given "special
treatment". This was also Mr.
Amoah's story in his reply to
the query given to him by •
Glico (Exhibit "Y"), and also in
the Statement (Exhibit "Z") he
made to the Police. Furthermore
before the problems which
resulted in the instant suit
arose, there were no guidelines
or rules, regulating the Issuing
of bonds in Glico. Guidelines
were introduced subsequently in
May 2009. He also stated that
the bonds in question were not
the first that Glico issued to
Addicent Foods. That, since
2006, Glico had issued four (4)
or five (5) such bonds for
securing facilities from NDK.
These pieces of evidence were
not controverted by Glico: I
will here refer to the judgment
of Denning L.J (as he then was)
in the case of H. L. Bolton
(Engineering) Co. Ltd v T. J.
Graham and Sons Ltd [1957] 1
Q.B. 159, CA, Where he said as
follows: "A company may in many
ways be likened to a human body.
It has a brain and nerve centre
which controls what it does. it
also has hands which hold the
tools and act in accordance with
directions from the centre. Some
of the people in the company are
mere servants and agents who are
nothing more than hands to do
the work and cannot be said to
represent the mind or will.
Others are directors and
managers who represent the
directing mind and will of the
company, and control what it
does. The state of mind of these
managers is the state of mind of
the company and is treated by
law as such' The House of Lords
considered the above dicta in
Tesco Supermarkets Ltd. V
Nattrass [1972] A.C. 1153, H.L.
and explained that Lord
Denning's words cannot
necessarily apply to all
servants of a company whose work
is brain work, or who exercise
some managerial discretion under
the direction of superior
officers of the company. Lord
Reid emphasized that Lord
Denning only referred to those
who "represent the directing
mind and will of the company,
and control what it does." Lord
Reid went on to explain that;
"Normally the board of
directors, the managing director
and perhaps some superior
officers of a company carry out
the functions of management and
speak and act as the company.
Their subordinates do
not............But board of
directors may delegate some part
of their functions to management
giving their delegates full
discretion to act independently
of instructions from them. I see
no difficulty in holding that
they have thereby put such a
delegate in their place so that
within the scope of the
delegation he can act as their
company" Mr. Amoah's position is
that he had the above described
authority. The Board Chairman
conceded, albeit reluctantly,
that Mr. Amoah was a Principal
Officer. The concept of
Principal Officer is common
knowledge in the insurance
industry. In the Insurance
Regulations, 1990 issued by the
Provisional National Defence
Council Secretary for Finance
pursuant to section 72 of the
old Insurance Law, 1989 (P.N.D.C.L
227), there is the following
provision: "PART II -
PARTICULARS AND QUALIFICATIONS
OF . INSURANCE DIRECTORS AND
PRINCIPAL OFFICERS. 3. (1) Every
insurer, re-insurer, broker or
adjuster shall have at least two
full-time chief executives, or
principal officers each of whom
shall has the following
qualifications -" Pursuant to
section 49 of the new Insurance
Act, Act 2006, the National
Insurance Commission has
produced a paper on the
qualification of Principal
Officers for insurance,
re-insurance and braking
companies as follows: "Insurance
Companies An insurer shall have
at least two full time Principal
Officers, One of whom shall be
the Chief Executive. Both shall
have the Following minimum
qualification and experience:" I
have taken note of the fact that
Glico General started operations
before the coming into force of
the new Insurance Act. So, in
the light of the
above...information, did Mr.
Amoah have the authority to
issue the bonds in question? In
the minutes of the Emergency
Board Meeting of Glico held on
Monday 18th 2009 (Exhibit
"37")it was recorded that Mr.
Amoah said at the meeting that
he issued the bonds without
seeking authorization from the
Board Chairman or the Board
Business and Technical
Committee, which implies that
Mr. Amoah ought to have sought
authorization. Mr. Amoah however
insisted at the same meeting
that he was authorized by the
Board Chairman. He stated that
at the commencement of business,
Glico was very much in need of
business and the Board Chairman
introduced Brigadier Nana
Acheampong to him, Mr Amoah, for
introduction of business. For
this reason, the Chairman
verbally requested that
expeditious attention be given
to business introduced by the
Brigadier. In his evidence, the
Board Chairman intimated that
there were some bonds that Mr.
Amoah was authorized to sign and
some that he was not. No
evidence was however led as to
which category or specific bonds
that he could sign. Mr. Amoah's
further evidence was that all
the instructions he had received
with regard to clients
introduced to him by the
Chairman were verbal. Mr. Amoah
stated that after a verbal
authorization has been given to
him by the Board Chairman, he
did not usually go back to the
Chairman for subsequent business
with that client. He stated
further that he could cite
instances when the Chairman had
given such verbal authorization.
It is my opinion the 2nd
Defendant; Glico did not lead
sufficient evidence as to what
procedure it had in place which
categorically stated that Mr.
Amoah ought to take directions
from a superior officer or even
the Board before issuing credit
guarantee bonds, As I have
earlier stated Mr. Amoah's
testimony that there were no
laid down rules for-.the issuing
of credit guarantee bonds by
Glico until just a few months
ago, has not been controverted
by Glico. The Board Chairman,
Mr. Acheampong-Kyei testified
that he never authorized Mr.
Amoah to issue credit guarantee
bonds in favour of Plaintiff at
anytime. He also said that
Brigadier-General Nana
Acheampong (D.W.7) who Mr. Amoah
claimed was the one who
introduced Ntorinkansah to the
Board Chairman, did not
introduce any client to him for
the purpose of obtaining credit
guarantee bonds to secure a
facility from Plaintiff. The
Chairman's evidence was that he
had gone to the Burma Camp with
Mr.Amoah where the' met
Brigadier-General Nana
Acheampong, who was responsible
at the time for awarding
contracts by the Ministry of
Defence for road construction.
The Chairman had asked the
Brigadier to be introducing
business to Glico. The evidence
of Mr. Charles Coker, the
Managing Director of Kosefield
Enterprise Company Ltd (P.W.5),
who gave evidence in support of
the Plaintiff's case, said that
he was introduced to the Board
Chairman by the same
Brigadier-General Acheampong who
was mentioned by Mr. Amoah as
the one who introduced
Ntorinkansah to the Chairman.
Mr. Coker's further evidence was
that the Brigadier called
Glico's Board Chairman on
telephone in his presence and
gave him his complementary card
for Mr. Coker to take to Glico
for assistance in procuring a
credit guarantee bond. Mr. Coker
testified that when he went to
Glico, the Board Chairman
referred him to Mr. Amoah, and
that is how he got the credit
guarantee bond which he used to
secure a credit facility from
Plaintiff. Mr. Cokers evidence
was not challenged by Glico.it
is trite learning that when a
party gives evidence and is not
cross-examined on it, he need
not call further evidence of
that fact. In the case of
Takoradi Flour Mills v Samir
Fans [2005-2006] SCGLR 882,
Ansah JSC referred with approval
to the case of Tutu v Gogo,
Civil Appeal No. 25/07, dated
28th April 1969, Court of Appeal
unreported; digested in 1969
CC76, in which case 0IIenu JA
said as follows: "In law, where
evidence is led by a party and
that evidence is not challenged
by his opponent in
cross-examination and the
opponent did not tender evidence
to the contrary, the facts
deposed to in evidence are
deemed to have been admitted by
the party against whom it is
led, and must be accepted by the
court." The position of the law
therefore is that Mr. Coker's
evidence has been admitted by
Glico and must therefore be
accepted by the Court. So, is it
the case that if the Board
Chairman did it for Mr. Coker,
he could have done the same for
Mr. Ntorinkansah? I could glean
from exhibit "24" a memo written
by Mr. Amoah to the Board
Chairman on "Underwriting of
Credit Guarantee Business For
Customers of Amalgamated Bank"
that he was quiet enthusiastic
about the credit guarantee
bonds. Mr. Amoah recommended
that Glico "enter into an
arrangement with Amalgamated
Bank and provide the cover, as
we could also mobilize more
premium income from the
business."The observation of the
Court is that Mr. Amoah appears
to have performed his duties
with a lot of zeal and seems to
have probably been over zealous
in his efforts to get business
for Glico. I must state here
that from the evidence placed
before the Court, I am not in
the position to make a definite
finding that Harold Ntorinkansah
and his companies were or were
not introduced to Mr. Amoah by
the Board Chairman, after having
been introduced to the Chairman
by the Brigadier. In the absence
of sufficient evidence that Mr.
Amoah had actual authority, the
evidence before the Court
indicates that Mr. Amoah may had
ostensible/usual authority.
There may also be insufficient
evidence to establish that Mr.
Amoah did not' have actual
authority, but the evidence
placed before the Court indicate
that Mr. Amoah had ostensible or
usual authority. In my opinion
therefore, on the balance of
probabilities, Glico has not
established that Mr. Amoah acted
ultra vires his power in the
Company, and I will so find.
Glico is also alleging fraud and
collusion against the Plaintiff,
Mr. Amoah, and all the other
Defendants. In "Kerr on the Law
of Fraud and Mistake', fraud is
referred to as follows: "Fraud,
in the contemplation of a civil
court of justice, may be said to
include properly all acts,
omissions, and concealments
which involve a breach of legal
or equitable duty, trust or
confidence, justly reposed, and
are injuries to another, or by
which an undue or
unconscientious advantage is
taken of another. All surprise,
trick, cunning, dissembling and
other unfair way that is used to
cheat any one is considered
fraud." What amounts to fraud
has been settled by the decision
of the House of Lords in Derry v
Peek [1889] App. Cas. 337, at
374, where Lord Herschell said
as follows: "Fraud is proved
when it is showed that a false
representation has been made (1)
Knowingly. (2) without believe
in its truth, or (3) recklessly,
careless whether it be true or
false. Although I have treated
the second and third as distinct
cases, I think the third is but
an instance of the second, for
one who makes a statement tinder
such circumstances can have no
real belief in the truth of what
he states. To prevent, a false
statement being fraudulent there
must I think, always be an
honest belief in its truth and
this probably covers the whole
ground, for one who knowingly
alleges that which is false has
obviously no such honest belief"
In the Court of Appeal case of
S.A. Turqui & Bros v Dahabieh
[1987-88] 2 GLR 486, this is
what Taylor JSC had to say about
fraud: "In my opinion, a charge
of fraud in law can be taken to
be properly made against a party
who knowingly or recklessly,
whether by conduct or words,
uses unfair, wrongful, or
unlawful means to obtain a
material advantage to the
detriment of another party. It
is an insidious form of
corruption and it is therefore a
charge involving moral obloquy.
Bluntly put without
equivocation, it is a species of
dishonest conduct. In law, it
involves a false representation
whether exhibited by words or
conduct or otherwise which in
the well-known words of Lord
Herschell in the locus classicus,
Derry v Peek (1889) 14 App Cas
337 at 374, HL is: '....made (1)
knowingly or (2) without belief
in its truth, or (3) recklessly,
careless whether it be true or
false" Collusion is also defined
in Addai v Donkor [1972] 1 GLR
209 CA by Archer JA as follows:
"The word collusion is a very
strong one carrying with it a
great deal of opprobrium. It
means a fraudulent secret
understanding." It is trite
learning that a party who
alleges fraud must clearly and
distinctly prove the fraud he
alleges. Even in a civil action,
a higher standard of proof is
required than that required in
proving ordinary matters. "A
civil court', said Denning L.J.,
"when considering a charge of
fraud will naturally require a
higher degree of probability
than that which it would require
if considering whether
negligence were established,"
(Baxter v. Baxter [1950] 2AII ER
458) I will now examine the
particulars of the fraud and
collusion 2nd Defendant, Glico,
is alleging against/between
Plaintiff, Mr.Amoah and the
other Defendants. One of the
grounds for the allegation is
that Plaintiff did not bother to
verify whether Mr. Amoah had
authority to issue the credit
guarantee bonds. In the case of
Godka Group of Companies vs. PS
International Limited, SCGLR
[2001-2002], Headnote 6, the
Supreme Court stated as follows:
"A person contracting with a
company was not required to
demand the production of a
resolution authorizing an
officer or agent to enter into a
contract." The Supreme Court
further stated that "under
section 144 of the Companies
Code Act 179, 1963, a company
might enter into a contract in
the same way as an individual
might In any case, a person
contracting with a company was
not required to demand the
production of a resolution
authorizing the board, the
general meeting, an officer or
agent of the company, as the
case might be, to enter into the
contract. And under the rule in
Turquand's Case or the "in-door
management rule", a person
dealing with a company was
entitled to assume, in the
absence of facts putting him on
notice or inquiry, that there
had been due compliance with all
matters of internal management
and procedure required by the
regulations of the company. The
rule had been codified in
section 139-143 of Act 179.
Under section 142 (2), if the
company had held out someone as
its agent, it would be stopped
from denying the appointment;
and a de jure or de facto
officer of the company could be
assumed to have the usual powers
and duties of that sort of
officer." Counsel for Glico has
however submitted that because
of Plaintiff's fraud and
collusion Plaintiff cannot pray
aid of the doctrine of "indoor
management". Glico also alleges
that the Plaintiff knew or ought
to have known that the Harold
Ntorinkansah is the manipulating
and controlling mind behind the
other Defendant Companies who
had hatched a plan with the
Plaintiff to afford Ntorinkansah
the opportunity to assess such
levels of credit. That,
Plaintiff knew or ought to have
known that Ntorinkansah is one
and the same as Addicent Foods
Ltd and Hansas Complex Ltd. It
is an undisputed fact that
Harold Ntorinkansah has shares
in the two Defendant Companies,
and is also a director. And even
though a limited liability
company is considered to be a
legal person with an existence
independent of that of its
members, yet it remains an
artificial person (and this is
common knowledge); its policies
are formulated and decided upom
only by individual human beings
and human agencies. "The company
itself cannot act in its own
person, for it has no person. it
can onIy act through directors,
and the case is, as regards
those directors, merely the
ordinary case of principal and
agent." (Per Cairns L.J. in
Ferguson v Wilson [1886] LR 2 Ch
77 at 89. There is also the
"Group of Companies" doctrine
which is one of the bases for
piercing the corporate veil to
make an act of one company
binding on its group affiliates
or even a natural person who is
the group's ultimate controlling
shareholder(s). Glico is
alleging therefore that in the
instant suits, Harold
Ntorinkansah was the aIter ego
of the two Defendant companies.
It was part of the fraud and/or
collusion that Plaintiff split
the facilities for Ntorinkansah
into three. So, did the
Plaintiff know that the two said
companies were under the control
of Harold Ntorinkansah? Yes,
Plaintiff did! Was it therefore
wrong for Plaintiff to have
granted facilities to all the
three entitles? On the face of
the records, there is nothing
untoward showing; the three
Defendants went through the
normal procedure of applying for
facilities, which facilities
were approved with terms and
conditions. Glico is relying on
a portion of Mr. Amoah's Police
Statement (Exhibit "Z") in
support of its allegation. The
said portion reads as follows:
"On the case in question,
initially the guarantee was for
a lump sum but NDK advised that
we separate the guarantee into
three namely, Harold
Ntorinkansah, Add/cent Foods Ltd
and Hansas Complex. The client
also requested nine months
guarantee period due to the
bureaucracy in shipping,
processing and payment but NDK
assured him of extension because
of the regulations" Mr. Amoah
confirmed this statement when he
testified in Court. The evidence
adduced on behalf of Plaintiff
was that Plaintiff dealt with
the Defendants as different
distinct entities. They were
aware that Harold Ntorinkansah
was the shareholder/director of
the 2 Defendant Companies. They
were also aware that Addicent
Foods was a subsidiary of Hansas
Complex. The said Defendants
applied for loan facilities from
Plaintiff, and as a condition
for the approval of the
facilities, Plaintiff requested
security in satisfaction of
which the Defendants provided
credit guarantee bonds from
Glico. It is also Glico's case
that Plaintiff devised this
scheme With Ntorinkansah to use
his companies to avoid exceeding
its limit with a single
exposure. Plaintiff denies this
and stated per the evidence of
Mr. Kittoe (PW.1) that there was
nothing in the law preventing
Plaintiff from granting
facilities to associated
companies. When it was suggested
to Mr Kittoe's that Bank of
Ghana required that no one
single exposure should go above
20% of the company's minimum
capital limit and therefore
Plaintiff devised a way of
giving monies to Ntorinkansah
through its 2 companies, his
testimony was that Plaintiff
would be sanctioned by the Bank
of Ghana if they gave out more
than their limit. He said
however this had nothing to do
with the facilities in question.
He also said that the green line
(pen mark) across the approval
letter indicated that Bank of
Ghana had examined the documents
with regard to the facility and
had raised no issue as to any
excess facility granted by the
Plaintiff to the Defendants.
Plaintiff had therefore done
nothing illegal. Glico did not
adduce any evidence to show that
the facilities granted by
Plaintiff were beyond
permissible limits. Glico did
not even lead any evidence as to
what the permissible limit is.
On the issue as to whether a
single firm in the insurance
industry can create three credit
guarantee bonds in respect of a
single facility as was done in
the case of Addicent Foods, Mr.
Amoah led evidence to show that
the three bonds were issued by
mistake and that the mistake was
corrected by the issuance of
exhibit "E” In any event, the
Plaintiff is not seeking to
enforce any other bond except
exhibit “E” Glico is also
alleging that Plaintiff did not
do due diligence in granting the
facilities to the Defendant
Companies.: Glico contends that
Ntorinkansah, Addicent Foods,
and Hansas Complex not credit
worthy and yet Plaintiff went
ahead and gave them the
facilities; Plaintiff did not
appear to care that the
Defendants could obviously not
repay the facilities. P.W.1's
evidence however was that
Addicent Foods Ltd had paid off
previous facilities he had
secured with credit guarantee
bonds issued by Glico. The Head
of Credits, P.W.2, also
testified that Harold and
Millicent Ntorinkansah had been
Plaintiff's customers for a
while and therefore knew their
requirements, and that is why
they procured the credit bonds
from Glico as security. He said
further that at the time the
loan facility was given to
Addicent Foods, Ntorinkansah did
not owe Plaintiff. According to
him, Ntorinkansah had a "very
excellent performance" record
prior to the transactions in
question. And since there is no
company that does credit rating
in Ghai3 Plaintiff did its best.
. P.W.2's further evidence was
that Plaintiff financed
transactions and if the
transaction was good and they
believed in it they would
finance it. He said that there
had been instances when they had
lent money without security if
they are able to control the
cash flow. He testified that the
procedure for granting
facilities was that Plaintiff
would conduct a pre-interview to
assure them that it is a legal
transaction for a start. They
also determine whether the
transaction is profitable and
that the cash flow is able to
support repayment within a
reasonable time. The further
evidence led by P.W.2 was that
Addicent Foods was in the
business of milling palm oil for
export and some of the monies
were given for the establishment
of a newer mill that they were
buying from India, and so some
of the initial payments went to
India. There was however some
delays in the manufacture of the
mill. Addicent got this new deal
to export processed oil co the
US and it made sense to
Plaintiff to help them to export
to pay off all the outstanding
debt. As part of their due
diligence, Plaintiff spoke to a
contact in the US given to them
by Addicent in the U.S., who
confirmed the transaction. P.W.2
also said that Mr. Ntorinkansah,
prior to the expiration of the
facility granted to him, went to
Plaintiff to request for an
extension because he did not
think he could meet the
repayment obligations. In view
of the prospect and potential of
the business, and also that he
had obtained the credit
guarantee bond, Plaintiff
granted the extension. There is
no evidence before this Court
that Addicent Foods Limited is
not engaged in oil palm
business, as Glico was
intimating. Glico did not lead
evidence to prove that Addicent
Foods was involved in any
fraudulent or criminal activity
as alleged. The failure of the
business for which the bond was
secured to raise funds to pay
the debt by itself, does not
make the business fraudulent.
Plaintiff denies the allegation
that the credit guarantee" bond
for Addicent Foods was backdated
to 22nd October, 2008 when the
request for the loan payment was
dated 1st November 2008. P.W.2's
evidence in response to this was
that there was no reason why
anybody would want to backdate
the bond so that it would be
accepted. Nothing precluded
Plaintiff from using a prior
instrument as long as it
satisfied the conditions, he
stated. P.W.2 also said that
whether the bond was obtained
before or after approval of the
facility was neither here nor
there. What was important was
that there was the bond in place
before disbursement was made.
P.W.2 also testified that it
obtained additional security
from Hansas Ltd by way of an
Undertaking from the Department
of Urban Roads that work carried
out by. Hansas Ltd would be paid
to Plaintiff. He however denied
knowledge of Counsel for Glico's
assertion that Hansas Ltd had
been paid the said monies by the
Department of Urban Roads, and
Glico did not produce any proof
that indeed the monies had been
paid to Hansas Ltd. As part of
the allegation that Plaintiff
did not due diligence, Glico is
contending that the bill of
lading (attachment to exhibit
30") produced by Ntorinkansah
was forged, and Plaintiff ought
to have known that. Glico called
as a witness (D.W4) from
Grimaldi Ghana Ltd, a shipping
company to speak to the bill of
lading Mr. Peter Addo Adotey
(D.W.4) said he was the Export
Supervisor of Grimaldi Ltd and
his evidence was that he did not
know the Plaintiff. Harold
Ntorinkansah, or Addicent Foods.
He said the bill of lading
was-not issued by Grimaldi Ghana
Ltd and he did not have it-on
his records. The bill of lading
bore two dates; 6th April 2009
as the date of issue, and 3rd
April, 2009 as the date shipped
on beard. The credit guarantee
bond, exhibit "E" was dated 22nd
October, 2008. It appears to me
the said bill of lading cannot
be used to support the
allegation that exhibit "E" was
procured by fraud. It is also
Glico's contention that it is as
a result of the collusion
between Plaintiff and the
Defendants that Plaintiff dealt
with only Mr. Amoah and no other
officer of Glico, not even the
Board Chairman. That all the
letters emanating from the
Plaintiff which were tendered in
evidence (e.g. exhibits "G", "2”
and "13") were addressed to Mr.
Amoah. The evidence is that
these letters were written by
the Managing Director. Head of
Credit (P.W.2). and Head of Loan
Recovery (P.W.1) of Plaintiff
Company. The evidence adduced on
behalf of Plaintiff was that it
was not a matter of choice that
they communicated with Mr. Amoah.
It was because it was Mr. Amoah
who signed the credit guarantee
bonds. In further support of its
allegation of fraud and
collusion, Glico is contending
that apart from Mr. Amoah, no
other officer at Glico knew
about the bonds that were issued
Mr. Amoah testified that Mr.
Ntorinkansah sometimes dealt
with his deputy. Mr. Amoah's
deputy, Ohenebeng Sarpong
(D.W.2) came to Court and
testified. He denied ever seeing
the credit guarantee bonds or
any correspondence connected
with the bonds; i.e. exhibits
"E", "H", '1', "3", '8", "9",
"20" and "32". He said he had
never sighted any file for the
Defendants herein in the records
room. But the question is did he
have any cause to look for the
files before these matters came
up? I would not expect Mr.
Sarpong to come to court to say
that he was an accomplice to the
alleged fraud perpetuated by Mr
Amoah. Mr. Sarpong, under
cross-examination, conceded that
the said bonds were witnessed by
one Odarkwei Mills, who the
Chairman described as a junior
member of staff, but D.W.2
referred to as an officer. Mr.
George Appiah Addae (D.W.8),
Deputy General Manager,
Operations also confirmed that
Mr. Mills was an officer. His
testimony under
cross-examination was that alt
the documents relating to the
transactions in question which
were tendered in evidence by
Glico, were found in the files
in the custody of the Company.
His further evidence was that
there was an indenture covering
a salt mining concession and
some counter guarantees from the
Defendants. He said however that
he suspected the documents were
slipped into the file after the
fact. As much as I would not
think that these facts exonerate
Mr. Amoah of any wrongdoing, it
does not prove Glico's claim
that Mr. Amoah conducted the
transactions in a clandestine
manner either Glico contends
further that the Plaintiff
directed service of the writ on
Mr. Amoah personally, and that
the Managing Director of Glico,
Mrs. Karikari, just happened to
accidentally chance on the
information that Glico had been
sued by Plaintiff. The said
Managing Director was allegedly
informed by a student of hers at
the Insurance College about the
suit. Glico called a
representative of City Toll
Company Limited (private process
servers), who did the service of
the Writ, as a witness. The
evidence of Tsakpowono Kodjo
Wisdom (D.W.5) was that it was
the practice for a plaintiff to
direct service, and the
Plaintiff herein directed the
bailiff to Mr. Amoah, for
service of the writ against
Glico in the suit against
Addicent Foods and Glico. The
evidence adduced by Plaintiff in
rebuttal was that Mr. Amoah was
the one they had been dealing
with all along at Glico, and
therefore they directed service
of the writ on Glico through Mr.
Amoah. The evidence of Mr Amoah
himself was that the writ was
issued against the Company,
Glico, and not him personally so
he could not have hidden it from
the Company. The evidence of
Edward Mettle-Nunoo (D.W.6),
Legal Advisor/Company Secretary
of Glico was that Mr. Amoah
informed him that he had
received a writ that had been
issued against the Company and
asked him to go and collect the
processes from him and handle
the suit. This does not smack of
someone who was hiding
information. Mr. Amoah looks to
me like someone who probably had
a strong belief of his power and
position in the company which
may have been encouraged by the
fact that he was given a lot of
discretion in the performance of
his duties. And why do I say so?
Mr. Amoah told the Court that he
had over thirty years experience
in the insurance industry. His
evidence was that he has played
a crucial role in Glico since
March 2005. He said he
singlehandedly started the
company; at the time the Company
did not have a license and he
had to work all by himself,
using his license, from march
until about August 2005 when the
Company got its license, and
operations started in October
2005. Mr. Amoah said he was
instrumental in recruiting about
six of the employees to help the
Company grow to this time. And
by 2008, when these problems
which have resulted in the
instant suits came up, Glico was
the 8th best in Ghana in terms
of gross premium income, in less
than four years of operation. He
said he had issued a lot of
bonds which the Company had
benefited from by way of
premium. It looks to me that Mr.
Amoah sees Glico as his baby.
Glico called Mr. Gideon Yaw
Amenyedor, Chief Executive of
Vanguard Assurance, amongst
others, as a witness. His
testimony was as follows;
"Underwriting basically is
assessment of risk factor and
risk factors are broken into
two, we have the pure risk
factors which deals with the
risk I have presented and then
we also have the aspect relates
to the individual who is coming
for the insurance which we call
the moral hazards and that has
gone to do with the honesty,
carelessness on that part so
those are the key things that we
look out. Relating to the bond
that you have asked, there are
certain key risk factors that we
look at; the very first one
which is top most is you want to
see the track record of the
client concerning his past
credit obligations, how he's
been able to honour it that is
the first one you want to see.
The second one also you want to
see whether he has some
financial obligations currently,
and the third one you will also
want to see the financial
standings of the client, his
ability to meet those
obligations etc. Then you would
also want to look at the money
he is looking for what he is
going to use it for? You want to
assess and see is it viable? Is
he capable of bringing returns
that will help you such that you
as a guarantor you will not be
in trouble then apart from all
those things you would also want
to assess the collateral that he
has available to see whether
it's a collateral that is worth
considering so those are the key
issues you would like to look at
apart from if you have any
information generally on his
dishonesty reported by the media
or any knowledge you have those
are the key thing you would want
to look at." Mr. Amoah contends
that he did not flout any of
these key issues. In spite of
Mr. Amoah's earlier evidence
that the Chairman authorized him
to do "unprofessional" work with
regard to Ntorinkansah, his
further evidence was that he
acted professionally in the
issuance of the bonds. He said
he collected collateral security
and counter indemnities. With
regard to Addicent Foods, a salt
mining concession was used as
security He also said that even
after the default by
Ntorinkansah occurred, he
procured a commitment letter
from Ntorinkansah. The Chairman
of Glico, in an attempt to
strengthen their case denied the
fact that Glico received
premiums in the said
transactions. The Plaintiff
however adduced cogent and
credible evidence to show
otherwise. The evidence of
P.W.4, Mary Amevor, Customer
Service Manager of Ecobank, Tema
Branch shows that Hansas Complex
Limited paid premium for the
issuance of the guarantee bond.
She tendered in evidence cheque
no. 000008, exhibit."AE," in the
sum of GH¢6,726.00. Her evidence
showed that the cheque was drawn
on the account of Hansas Complex
Ltd and the payee was Glico. She
said the cheque was cleared and
the 2nd Defendant had the
benefit of the value of the
cheque in the sum of GH¢6,726.00.
Another cheque no. 000007 dated
18th February 2008 which was
also tendered as exhibit "AF"
for the value of GH¢4,200.00 was
also paid to Glico Cheque no
000327 dated 5th June 2008
tendered as exhibit "AG" in the
sum of GH¢14,800.00 was also
paid to Glico. There was also
another cheque no. 000465 dated
20th November, 2008 tendered as
exhibit 'AH' with the face value
of GH¢5,000.00 which was paid to
Glico. Her evidence was not
contradicted in any way as
cross-examination did not centre
on whether or not Glico did not
receive those cheques but rather
on the relationship between
Hansas Complex Ltd and the
shareholders. In my opinion,
Glico has not established the
elements that must necessarily
exist before the Court can make
a finding that it has been
defrauded by Plaintiff and the
other Defendants. There is no
evidence placed before the court
to establish that NDK
collaborated with any official
of Glico such that NDK cannot be
seen to be benefiting from its
own actions. Is it Glico's case
that the whole company (NDK)
colluded with Mr.Amoah and the
Defendants, or that there was an
individual officer(s) in
Plaintiff Company that so
colluded? And if so who was it?
Looking at the pleadings on
their own, it may appear that
Mr. Amoah erred in not referring
the applications for the credit
guarantee bonds to any superior
authority, for they were
colossal amounts. But looking at
the position that Glico took and
the evidence adduced by Glico
itself, it appears to me that on
the balance of probabilities Mr.
Amoah only did what Glico has
been doing, i.e. allow Mr. Amoah
to do pretty much as he deemed
fit as long as Glico benefitted
from the business. The problem
is just that this time Glico
found the transactions in
question objectionable. As I
have earlier stated, I cannot
definitely opine that Mr. Amoah
was not authorized by conduct of
the 2nd Defendant, Glico. The
evidence adduced on behalf of
Glico is suspicion and emotion.
Unfortunately the Court does not
act on suspicion and emotion.
The onus probandi was on Glico
to prove its case, but Glico has
failed to do so, and I will so
find. From this experience, my
advice to Glico, if I may, would
be that if they have not already
put such procedure in place, a
better practice would be to set
thresholds as to the value of
credit guarantee bonds that can
be authorized by management
staff with approval by the
Managing Director or the Board.
The absence of such procedure
might have caused the problem in
this suit. Counsel for Glico
raises in his written address
the issue of the validity of the
credit guarantee bonds. He
states that they are void as
they violate section 44(1) of
the Insurance Act, Act 724. It
provides as Follows: "Avoidance
of contracts of insurance of
unlimited amount Subject to
subsection (2), a contract of
insurance entered into by an
insurer after the commencement
date is void if it is a contract
under which the insurer
undertakes a liability the
amount, or maximum amount, of
which is uncertain at the time
when the contract is entered
into". George Appiah Addae
(DW8)'s evidence was that the
open ended period indicated in
the credit guarantee bonds
issued by Mr. Amoah sins against
the rules of Insurance. It is
Counsel's submission that the
liability of Glico is uncertain.
The portion of the bonds Glico
is referring to states as
follows: "Now, therefore the
condition of obligation is that
if the Customer shall fail to
repay to the Bank the said
facility, then we Glico General
Insurance Company of P.O.Box
4251, Accra, will upon demand of
the Bank pay to the Bank any sum
that is due and owing on the
facility. This guarantee shall
remain in force for so long as
there is any sum due and owing
from the Customer to the Bank on
the facility." In my opinion, a
further reading of section 44,
particularly 44 (3) indicates to
me that the provision is
referring to motor insurance. It
is to ensure that the law is not
used to limit liability payable
as a result of death or
permanent disability. From the
totality of the evidence placed
before the Court, I will find
that Plaintiff is entitled to
recover jointly and severally:
1. The sum of GH¢471,842.39 from
Harold Ntorinkansah and Glico
together with interest at the
rate 4.5% per month calculated
at the close of each day and
payable at the end of every
month from 28th April, 2009 up
to and inclusive of date of
final payment: 2. The sum of GH¢1,
095,730.76 from Addicent Foods
Ltd and Glico, together with
interest at the rate of 4.5% per
month calculated at the close of
each day and payable at the end
of every month from 28th April,
2009 up to and inclusive of date
of final payment. 3. The sum of
GH¢192, 539.71 from Hansas
Complex Ltd and Glico, together
with interest at the rate of
6.5% per month calculated at the
close of each day and payable at
the end of every month from 1st
June, 2009 up to and inclusive
of date of final payment.
Plaintiff has already obtained
judgment against Ntorinkansah,
Addicent Foods and Hansas
Complex, but has not as yet gone
into execution. It is trite
learning that a contract of
guarantee, is in the true sense,
a contract whereby the guarantor
(or surety) promises the
creditor to be responsible, in
addition to the principal, for
the due performance by the
principal of his existing or
future obligations to the
creditor, if the principal fails
to perform those obligations.
Thus, a contract of guarantee
has been described as a contract
to indemnify the creditor on the
occurrence of a contingency,
namely the default of the
principal debtor; see Sampson v
Burton [1820] 4 Moore C.P 515,
129 E.R. 27. In Wardens and
Commonality of the Mystery of
Mercers of the City of London v
New Hampshire Insurance Company
[1991] 3 J.L.B.F.L. 144,
Phillips J cited with approval
the following definition of a
guarantee which is given in
HaIsbury's Laws of England (4th
ed. 2004 reissue) at para. 101:
"A guarantee is an accessory
contract by which the promisor
undertakes to be answerable to
the promise for the debt,
default or miscarriage of
another person, whose primary
liability to the promisee must
exist or be contemplated." It is
important to note that an
essential distinguishing feature
of a contract of guarantee is
that the liability of the
guarantor is always ancillary,
or secondary to that of the
principal, who remains primarily
liable for the creditor. There
is no liability on the guarantor
unless and until the principal
has failed to perform his
obligations. In Lakeman v
Mountstephen [1874] L.R. 7 H.L.
17, Lord Selborne put the matter
succinctly at 24: "There can be
no suretyship unless there is a
principal debtor, who of course
may be constituted in the course
of the transaction by matters ex
post facto and need not be so at
the time, but until there is a
principal debtor there can be no
suretyship. Nor can a man
guarantee anybody else's debt
unless there is a debt of some
other person to be guaranteed."
Fortunately, in the instant
suits, the Defendants,
Ntorinkansah, Addicent Foods
Ltd, and Hansas Complex Ltd, are
not denying that they owe and
are the primary debtors. The
evidence of Mr. Amoah was that
at a meeting between the
Plaintiff, the Defendants and
himself representing Glico,
NtorinKansah admitted their
liability and issued a
commitment letter. The purpose
of the commitment letter was to
prove that Ntorinkansah did not
want Glico to incur any
financial loss. The Head of
Credit (P.W.2) also stated in
his evidence that Plaintiff had
not gone into execution because
of the instant trial. In
conclusion, I will hold that
Plaintiff is entitled to all the
reliefs it is seeking. I will
dismiss all of Glico's claims.
The principle of law however as
to whom the 1st obligor is and
who the 2nd obligor is well
noted. Such principle of law,
and looking at the facts of this
case, should be noted by the
Plaintiff. With regard to the
claim for costs including 10%
legal fees, I will hold that
because of the fact that Glico
was not party to the contract
between Plaintiff and the other
Defendants, the legal fees
should be borne by the said
Defendants. I will however award
costs of GH¢ 3,000 against
Glico. COUNSEL PEASAH BOADU -
PLAINTIFF ATTA AKYEA - 2ND
DEFENDANT
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