ADUTWUM V OPPORTUNITY SSAVINGS AND LOANS (A2/002/2023) [2024] GHADC 534 (15 November 2024)

IN THE CIRCUIT COURT HELD AT AKROPONG ON WEDNESDAY THE 15TH DAY OF NOVEMBER 2024 BEFORE H/H NANA ADWOA SERWAA DUA- ADONTENG OFORI ESQ SITTING AS THE JUDGE SUIT NO. A2/002/2023 MR. KWAKU ADUTWUM .... PLAINTIFF VRS: OPPORTUNITY SAVINGS AND LOANS LTD .... DEFENDANT --------------------------------------------------------------------------------------------------------------------- PLAINTIFF PRESENT DORINDA ACQUAH REPRESENTS DEFENDANT PRESENT OSEI-WUSU ANTWI, ESQ FOR PLAINTIFF PRESENT YAW ATTAKORAH AMOH, ESQ FOR DEFENDANT PRESENT On the 8th day of May, 2023, the Plaintiff caused to be issued out of the Registry of this Court, a writ of summons accompanied by a statement of claim. The Plaintiff thus claimed against the Defendant, the following reliefs: 1. Payment to the plaintiff of an amount of Twenty-Five Thousand Six Hundred and Ninety-Two Cedis (GHS25,692.00) wrongfully deducted from plaintiff’s account. 2. Interest on the sum of Twenty-Five Thousand Six Hundred and Ninety-Two Cedis (GHS25,692.00) at the prevailing commercial bank rate from 8th September 2022 till date of final payment, 3. General Damages 4. Costs occasioned by this suit including solicitor’s fees On the 20th day of June, 2023, the Defendant also filed a statement of defence. The Plaintiff’s Case It is the plaintiff’s case that he is the proprietor of Kwakuyeb Enterprise, a distributor of Twyford Ghana; dealers in floor and wall tiles; who operates an account with the defendant at its Abuakwa branch. Plaintiff avers that his customer interested in purchasing tiles worth Ghs180,000 deposited a GCB cheque in plaintiff’s account on 11th August, 2022. Subsequently when the cheque was confirmed cleared and his account was credited with the Ghs180,000, he supplied his customer with the tiles. On 15th August, 2022, on the strength of the cheque clearing, he withdrew Ghs130,000. On 6th September, 2022, plaintiff claims he was surprised to receive a call from an officer of the defendant informing him that the cheque which had cleared was returned. Upon enquiring from the officer how cheque which had cleared three weeks prior could be returned, he was informed that a mistake had occurred for which he, plaintiff collaborated with the defendant to resolve the matter. Plaintiff further claimed that believing that his account was now free from any anomaly he deposited Ghs20,240.49 on 6th and 7th September, 2022 which should have left him with a balance of Ghs25,692.49. However, to his dismay, he noticed that the amount of Ghs5,452 which was already in his account had been deducted on 5th September, 2022 without any prior notice by the bank. To his further shock, on 8th September, 2022, the bank again wrongly deducted the Ghs20,240 which he had standing to his credit. When he informed the bank of the anomaly, he was informed that an automatic reversal had been done on the account to offset transaction involving the Ghs180,000 credited to his account. Plaintiff therefore prayed that the defendant acted negligently deduction monies standing to his credit. The Defendant’s Case The Defendant denied substantially all the averments of impropriety on its part by the Plaintiff. It is the defendant’s case that the cheque of Ghs180,000 credited into the plaintiff’s account was awaiting clearance from its clearing bank ADB. That plaintiff was only able to withdraw monies out of his account because the cheque was undergoing clearing which is a normal procedure. Defendant claims it never confirmed to the plaintiff that the cheque had cleared and it is its automatic reversal system which subsequently deducted plaintiff’s account when the cheque was returned. Defendant prayed that it acted on the instructions of its clearing bank ADB who made it believe that the cheque deposited by the plaintiff’s customer was credible. Defendant claimed that plaintiff had not been corporative in finding who its customer is who issued the cheque by reason of this defendant is in a loss of Ghs150,000 and therefore plaintiff is not entitled to his claims. The defendant prior to Application for Directions made an Application for ADB to be joined to the suit. The court ruled that ADB was not a proper party to be joined to the suit because no cause of action arose against ADB from the plaintiff. Issues Set Down for Trial At the Application for Directions stage, the court set down for trial, the issues raised by the Plaintiff. I shall however adopt these issues for analysis and determination; a. Whether or not the Defendant followed settled banking rules and best practices when crediting the plaintiff’s account. b. Whether or not a cheque undergoing clearing can be credited to the account of a customer? c. Whether or not it was wrongful for Defendant to credit the amount of Ghs180,000 into plaintiff’s account. d. Whether or not the Defendant negligently withdrew from the Plaintiff’s accounts the amount of Ghs25,692 through want of utmost good faith, due care, best practices the full details of which are set out in paragraph 22 of the statement of claim. e. Whether or not the Defendant at all times during the period it has handled the Plaintiff accounts in good faith in or the regular course of business. Legal analysis The relationship between a bank and its customer is one of contract. Therefore, the basic principles of contract apply to this relationship. As the law of contract teaches, the terms may be express or implied. Where the terms of the relationship are not specifically in writing, but expected to be inferred from a circumstance, then, it ought to be demonstrated that, at all times, the party against whom it is going to be used knew about it and did acknowledge same. Anytime there is an allegation of a breach of any of the duties owed to either the bank or the customer, then, it is important to consider the scope of the contract entered into by the parties vis-à-vis the statutory regime regulating that contractual relationship. In Foley Vs. Hill (1848) 2 HLC 28 the English House of Lords decided that, in the absence of a special relationship between a bank and its customer, the relationship is that of a debtor and a creditor. Lord Cottenham had this to say within the context of deposits made by customers to banks: “Money, when paid into a bank, ceases altogether to be the money of the principal; it is by then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it. The money paid into a bank is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains to himself, paying back only the principal, according to the custom of bankers in other places. The money placed in custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as a the property of his principal; but he is, of course, answerable for the amount because he has contracted having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands. That has been the subject of discussion in various cases, and that has been established to the relative situation of banker and customer. That being established to be the relative situations of banker and customer, the banker is not an agent or factor but he is a debtor.” For his part, Lord Brougham said at page 43 of the report as follows:- “I am now speaking of the common position of a banker, which consists of the common case of receiving money from his customer on condition of paying it back when asked for, or when drawn upon, or of receiving from other parties, to the credit of the customer, upon like conditions to be drawn out by the customer, or in common parlance, the money being repaid when asked for, because the party who receives the money has the use of it as his own, and in the using of which his trade consist, and but for which no banker could exist, especially a banker who pays interest.” In Tai Hing Cotton Ltd. Vs. Liu Chong Hingbank [1985] 3 WLR 33, Lord Scarman also had this to say about the bank/customer contractual relationship: “If the banks wish to impose upon their customers an express obligation to examine their monthly statements and to make those statements, in the absence of query, unchallengeable by the customer after expiry of a time limit, the burden of the objection and of the sanction imposed must be brought home to the customer…The test is rigorous because the bankers would have their terms of business so construed as to exclude the rights which the customer would enjoy if they were not excluded by express agreement. It must be borne in mind that, in their Lordships’ view, the true nature of the obligations of the customer to his bank where there is no express agreement is limited to the Macmillan and Greenwood duties. Clear and unambiguous provision is needed if the banks are to introduce into the contract a binding obligation upon the customer who does not query his bank statement to accept the statement as accurately setting out the debit items in the accounts.” The duties banks owe their customers can be gleaned from the pronouncement of Lord Atkin in the Tai Hing Cotton Ltd. case (supra): where the Law Lord articulated as follows:- “The question seems to turn upon the terms of the contract made between banker and customer in ordinary course of business when a current account is opened by the bank. It is said on the one hand that it is as simple contract of loan; it is admitted that there is added, or superadded, an obligation of the bank to honour the customer’s drafts to any amount not exceeding the credit balance at any material time; but it is contended that this added obligation does not affect the main contract. The bank has borrowed the money and is under the ordinary obligation of a borrower to repay. The lender can sue for his debt whenever he pleases. I am unable to accept this contention. I think that there is only one contract made between the bank and its customer. The terms of that contract involve obligations on both sides and require careful statement. They appear upon consideration to include the following provisions. The bank undertakes to receive money and to collect bills for its customer’s account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them the promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch, and as such written orders may be outstanding in the ordinary course of business for two or three days, it is a term of the contract that the bank will not cease to do business with the customer except upon reasonable notice. The customer on his part undertakes to exercise reasonable care in executing his written orders so as not to mislead the bank or to facilitate forgery. I think it is necessarily a term of such contract that the bank is not liable to pay the customer the full amount of his balance until he demands payment from the bank at the branch at which the current account is kept…The result I have mentioned seems to follow from the ordinary relations of banker and customer, but if it were necessary to fall back upon the course of business and the custom of bankers, I think that it was clearly established by undisputed evidence into his case that bankers never do make a payment to a customer in respect of a current account except upon demand.” Observably, the Bank is under a duty to comply with the mandates and instructions of the customer. See the case of B. Ligget (Liverpool) Ltd. Vs. Barclays Bank Ltd. [1928] 1 KB 48. Further, at common law, the bank is under a duty to keep confidential, transactions with the bank as decided in cases such as Tournier Vs. National Provincial and Union Bank of England [1924] 1 KB 461. The Bank must also, keep and provide regular and accurate bank statements to the customer. In dealing with the customer, the bank must, exercise due diligence and care. If the bank fails to pay on the mandate, the Bank will be liable for the loss. See the cases of Kelly Vs. Solari [1941] 152 ER 24, Lipkin Gorman (A Firm) Vs. Karpnale Ltd. [1992] 4 ALL ER 331 and Bank of Africa Ltd. Vs. Ackon [1963] 1 GLR 176 on the bank’s duty to at all times to honour the mandates of the customer on the account, unless, there is an exceptional situation such as fraud. In Greenwood Vs. Martins Bank Ltd. [1933] AC 51, the English House of Lords made a statement on one of the duties of a customer to the bank when it held that, a customer of the bank was under a duty to inform the bank of any forgeries immediately they were detected and failure to do so, upon being aware will estop the customer from claiming a recovery of his money. The House of Lords speaking through Lord Tomlin expressed itself as follows: “The Appellant’s silence, therefore, was deliberate and intended to produce the effect which it in fact produced – namely, the leaving of the Respondents in ignorance of the true facts so that no action might be taken by them against the Appellant’s wife. The deliberate abstention from speaking in those circumstances seems to me to amount to a representation to the respondent’s that the foraged cheques were in fact in order, and assuming that detriment to the respondents followed there were, it seems to me, present all the elements essential to estoppel. Further, I d o not think that it is an answer to say that if the Respondents had not been negligent initially the detriment would not have occurred. The course of conduct relied upon as founding the estoppel was adopted in order to leave the Respondents in the condition of ignorance in which the Appellant knew they were. It was the duty of the Appellant to remove that condition however caused. It is the existence of this duty, coupled with the Appellant’s deliberate intention to maintain the Respondents in their condition of ignorance that gives its significance to the Appellant’s silence.” Further, the customer is under a duty to exercise due care when drawing a cheque, bills of exchange or other negotiable instruments so that they are not easily altered. In London Joint Stock Banking Ltd. Vs. Macmillan & Arthur [1918] AC 777, a firm entrusted to a confidential clerk, whose integrity they had no reason to suspect, the duty of filling in their cheques for signature. The clerk presented to one of the partners of the firm for signature a cheque drawn in favour of the firm or bearer. There was no sum in words written on the cheque in the space provided for the writing and there were the figures ‘200’ in the words ‘One Hundred and Twenty Pounds’ in the space left for words and wrote the figures ‘1’ and ‘0’ respectively on each side of the figure ‘2,’ which was so placed as to leave room for the interpretation of the added figures. The clerk presented the cheque for payment at the firm’s bank and obtained payment of 120 pounds out of the firm’s account. An action was brought by the Plaintiffs to have it declared that, the Defendants are not entitled to debit the Plaintiffs with a cheque for 120 pounds instead of 2 pounds. The bank resisted the claim on the grounds that the Plaintiffs had drawn the cheque so negligently as to lead to the fraud, and that the Plaintiffs had entrusted the cheque signed by them to their clerk authorizing him to fill it up. In determining liability, it was held that the firm had been guilty of a breach of the special duty arising from the relation of banker and customer to take care in the mode of drawing the cheque, and the alteration in the amount of the cheque was the direct result of that breach of duty, and the bank were entitled to debit the firm’s account with the full amount of the cheque. In elucidating on the issue, Lord Finlay LC pronounced as follows: “The relation between banker and customer is that of a debtor and creditor, with a superadded obligation on the part of the banker to honour the customer’s cheques if the account is in credit. A cheque drawn by a customer is in point of law a mandate to the banker to pay the amount according to the tenor of the cheque. It is beyond dispute that the customer is bound to exercise reasonable care in drawing the cheque to prevent the banker being misled. If he draws the cheque in a manner which facilitates fraud, he is guilty of a breach of duty as between himself and the banker, and he will be responsible to the banker for any loss sustained by the banker as a natural and direct consequence of this breach of duty.” “In the present case the customer neglected all precautions. He signed the cheque, leaving entirely blank the space where the amount should have been stated in words, and, where it should have been stated in figures, there was only the figure “2” with blank spaces on either side of it. In my judgment, there was a clear breach of the duty which the customer owed to the banker. It is true that the customer implicitly trusted the clerk to whom he handed the document in this state to fill it up and to collect the amount, but his confidence in the clerk cannot excuse his neglect of his duty to the banker to use ordinary care as to the manner in which the cheque was drawn. He owes hat duty to the banker as regards the cheque, and it is no excuse for neglecting it that he had absolute, and, as it turned out, unfounded, confidence in the clerk. The duty is not a duty to have clerks whom the customer believes to be honest. It is a specific duty as to the preparation of the order upon the banker. If the customer chooses to dispense with ordinary precautions because he has complete faith in his clerk’s honesty, he cannot claim to throw upon the banker the loss, which results. No one can be certain of preventing forgery, but it is a very simple thing in drawing a cheque to take reasonable and ordinary precautions against forgery. If, owing to the neglect of such precautions, it is put into the power of any dishonest person to increase the amount by forgery, the customer must bear the loss as between himself and the banker. But, further, it is well settled law that if a customer signs a cheque in blank and leaves it to a clerk or other person to fill it up, he is bound by the instrument as filled up by the agent.” Lord Shaw put the obligation of the bank towards their customers by emphasizing that: “A cheque with the signature of a customer forged is not the customer’s mandate or order to pay. With regard to that cheque, it does not fall within the relation of banker and customer. If the bank honours such a document not proceeding from its customer, it cannot make the customer answerable for the signature and issue of a document which he did not sign or issue; the banker paying accordingly has paid without authority, and cannot charge the payment against a peso who was a stranger to the transaction”. In recent times the Banks and Specialised Deposit-Taking Institutions Act, 2016, Act 930, is the primary statute governing banking industry in Ghana. Ghana Interbank Payment and Settlement System Limited (GhIPSS) is a wholly-owned subsidiary of the Bank of Ghana responsible for interbank transfers to go through on the same day under the Direct Credit system either through the Standard Cheque Clearing which is the default cheque clearing service whereby cheques are cleared within two days beginning from the day the cheque is deposited at the bank. Most banks do not charge for this service or Electronic Cheque Clearing System (ECCS) also known as the Cheque Truncation System (CTS) which involves the process of inter-bank cheque settlement by using both cheque electronic records In their article Understanding the Electronic Cheque Clearing System in Ghana, authors Alexander Ekow Asmah, Joshua Ofoeda and Ken Gyapong explain electronic cheque clearing in Ghana. As explained above, Electronic Cheque Clearing System (ECCS) also known as the Cheque Truncation System (CTS) involves the process of inter-bank cheque settlement by using both cheque electronic records and scanned copy of the cheque (it can be gathered that ECCS involves the process of capturing bank cheques electronically and transmitting them to other banks without physical movement of the cheques. Once the teller in the bank of first deposit (BFD) receives the cheque item, the scanned copy is sent to the paying bank through central bank to be technically and financially cleared through high-speed secure connection lines, the reply for that action to pay or reject the cheque is generated from the paying bank to the central bank and then sent back. Cheque truncation is the process in which the physical movement of cheque within a bank, or between banks and clearing house is replaced by electronic records. Cheques are written orders from account holders instructing their banks to pay specified sums of money to named beneficiaries. When customers deposit their cheques to the collecting banks, the scanned copy is sent to the paying bank through the central bank to be technically and financially cleared through high-speed secure connection lines. The centre of the cheque clearing process is the clearing house, central bank, monetary agency. The role of these institutions is to verify the cheque clearing process and enforce financial procedures, regulations and laws, as well as to monitor and follow up their implementation. Truncated cheques will then be presented to the drawee’s bank electronically for verification. The reply for that action to pay or reject the cheque is generated from the paying bank to the central bank and then sent to collecting bank for final payment to the customer. The physical cheques are kept at the collecting bank or the clearing house although the drawee bank may still be able to examine it to make payment decisions. There are three main types of interbank payments systems: net settlement systems, real time gross settlement systems, and correspondent banking. Net settlement is a payment settlement system between banks, in which a vast number of transactions are collated and offset against each other, with only the net difference being transferred and paid by banks. In other words, the participating banks exchange huge sums during the business day and make settlement of net balances at the end of day. A clearinghouse acts as an intermediary and collects good funds from due-to banks and releases good funds to due-from banks. Final settlement occurs when the clearinghouse has successfully completed this process. The primary reason that net settlement systems exist is to reduce the cost to settle a given value of payments. If banks had to settle payments individually, they would on average need to hold more reserves. Real Time Gross Settlement (RTGS) payment systems have replaced the netting systems around the world in the recent decades. A real-time gross settlement system is a payment system in which all payments take the form of transfers of central bank funds from the account of the paying bank to the account of the receiving bank. Under corresponding banking, a correspondent bank is a bank that regularly performs services for another financial institution which is usually located in another country The pre-conversion process is the first process in ECCS. The process begins after a customer has presented a cheque drawn on another bank for deposit into his or her account. The next step is The actual conversion begins with scanning the image through the scanner and the capture of data associated with the images such as date, amount, cheque number, sort codes, drawer and payee. Before scanning, the clearing officer is required to ensure that the cheque meets basic banking rules and is not a forged or cloned cheque The paying bank verifies the cheque data and image to confirm the validity. The signature, amount, cheque number and payee are confirmed before payment. The transaction is confirmed if the paying bank does return the cheque through the issuance of a debit note during the return session. The settlement is done on Net basis. The Bank of Ghana account of each bank is debited and credited with the net amount arising out of the clearing sessions. Burden of Proof There being no counterclaim in this suit, the burden of proof is on the Plaintiff in this Solicitor-Client relationship non-payment of bill case. The Plaintiff by law has a burden to prove its case in accordance by the standard required in civil actions being the balance of probabilities. On the law of evidential burden as stated in Takoradi Flour Mills Vs. Samir Fans [2005-2006] SCGLR 882, the Supreme Court held that:- “It is sufficient to state that this being a civil suit, the rules of evidence require that the Plaintiff produces sufficient evidence to make out his claim on a preponderance of probabilities as defined in Section 12 (2) of the NRCD 323. In assessing the balance of probabilities, all the evidence, be it that of the Plaintiff or the Defendant, must be considered and the party in whose favour the balance tilts is the person whose case is more probable of the rival versions and is deserving of a favourable verdict” The position of the law is that the person who asserts assumes the burden of proof. Faibi Vs. State Hotels Corporation (1968) GLR 471. In the case of Okudzeto Ablakwa (No. 2) Vs. Attorney General & Another [2012] 2 SCLR 845 the Supreme Court held at p. 867 that: “If a person goes to court to make an allegation, the onus is on him to lead evidence to prove that allegation, unless the allegation is admitted. If he fails to do that, the ruling on that allegation will go against him. Stated more explicitly, a party cannot win a case in court if the case is based on an allegation which he fails to prove or establish. This rule is further buttressed by section 17 (b) which, emphasizes on the party on whom lies the duty to start leading evidence... Assessment Of Damages When a claim for damages is included in an action, the plaintiff or claimant is required under the law to provide evidence in support of the claim and to give facts upon which the damages could be assessed. Simply put, before assessment of damages could be made, the plaintiff or claimant must first furnish evidence to warrant the award of damages. He must also provide facts that would form the basis of assessment of the damages he would be entitled to. His failure to do so would be fatal to his claim for damages. According to Lord Macnaghten, ‘General damages’ are such as the law will presume to be the direct natural or probable consequence of the action complained of. ‘Special damages’ on the other hand, are such as the law will not infer from the nature of the act. They do not follow in ordinary cause. They are exceptional in character and therefore they must be claimed specially and proved strictly. The Supreme Court echoed the same principle in the case of Juxon-Smith V. Klm Dutch Airlines [2005-2006] SCGLR, 438 @ 442 in its holding (5) as follows: “Where a party has sustained a loss by reason of a breach of contract, he was, so far as money could do it, to be placed in the same situation with respect to damages, as if the contract had been performed. In carriage of persons contract, as in the instant case, the normal measure of damages for failure to carry, was the cost of obtaining substitute transport less the contract price and consequential losses such as hotel expenses and the like and non-pecuniary loss such as physical inconvenience and discomfort”. Nominal Damages will be awarded where the court decides in the light of all the facts that no actual damage has been sustained. See Neville V. London Express Newspaper Ltd [1919] A. C. 368 @ p. 392, per Viscount Haldane – H. L. According to Street on Torts, the function of nominal damages is to mark the vindication, where no real damage has been suffered, of a right which is held to be so important that infringement of it is a tort actionable per se. [Street on Torts 5th Edition London Butterworth]. This means that nominal damages are normally awarded in all tort. The evidence clearly shows that, the very complaint of the Plaintiff that, he did not authorise certain transactions, is consistent with the evidence with the defendant’s witness that the deductions on the plaintiff’s account were automatic and without recourse to the plaintiff. From my evaluation of the entire evidence on record, I find that properly considering the evidence adduced at the trial, the plaintiff succeeded in properly establishing the evidential burden on him. I therefore grant judgment in favour of the plaintiff as follows: 1. Payment to the plaintiff of an amount of Twenty-Five Thousand Six Hundred and Ninety-Two Cedis (GHS25,692.00) wrongfully deducted from plaintiff’s account. 2. Interest on the sum of Twenty-Five Thousand Six Hundred and Ninety-Two Cedis (GHS25,692.00) at the prevailing commercial bank rate from 8th September 2022 till date of final payment. 3. Cost of GHS10,000 in favour of the plaintiff. 4. Nominal Damages of Ghs15,000 is awarded in favour of the plaintiff. (SGD) NANA ADWOA SERWAA DUA-ADONTENG OFORI (CIRCUIT JUDGE)