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BANK OF WEST Africa LTD v Appenteng and Another

case brief

University

Mountcrest University College

Course

Company Law

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Francis Adlah

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Bank of West Africa Ltd. V. Appenteng and Another

This is a Ghanaian Company Law case which discussed inter alia right of shareholder to sue, estopel etc.
It considered of four consolidated actions against the appellants (Bank of West Africa). This was an
appeal by the Bank of West African against judgement entered for the first and second plaintiffs (now
respondents). The first three actions were by the first respondents.

The first respondent, a director of Mpotima Ltd alleged he deposited his title deeds to enable the
company secure a loan of 8,000 but on repayment of the loan, the appellants issued another loan of
11,000 to the company without his knowledge and consent. He further alleged in a separate action that
he had deposited some other properties to the appellants as guarantee for a loan to be given to the
managing director of Mpotima ltd which was in fact not given as a fresh loan but to cove an existing
loan. He further averred that he was an illiterate and did not understand the implications of the
execution of the deeds. As part of his actions, he alleged the appellants wrote a letter to potential
buyers of his properties indicating he (first respondent) was not known to the bank. He therefore sued
for release of his properties, damages for wrongful detention of his property, deceit and libel.

The second respondent, wife of the managing director, alleged she has also deposited title deeds for a
loan to be given to the company but after repayment, the appellants detained her title deeds. She also
sued for damages for negligent advice given by the appellants to Mpotima which resulted in cross firing
of cheques and subsequent liquidation of same which she suffered loss as a shareholder.

The issue for determination was whether or not the appellants wrongfully detained the title deeds of
the first and second respondents, whether the appellant’s response that they did not know the first
respondent amounted to libel, and whether or not the appellants negligently and wrongfully advised the
company and if so whether the second respondent was the proper party sue.

The court of first instance held for the plaintiffs for all reliefs except for negligent advice. On appeal,
counsel for the appellants argued that the title deeds were not deposited for a specific loan, instead it
was for subsequent ones as well. He further submitted that, the first respondent had no account with
the appellants and thus, the officer’s response was a report to that effect. Lastly, he submitted that if
there was any negligent advice at all, the property party to sue was the company and not the second
respondent.

The court held allowing the appeal, on the issue of negligent advice that the second respondent could
not sue because, as a general rule, only the company can sue for wrong done to it (Foss v Harbottle
cited) and besides the weight of the evidence did not support the allegation of wrong advice. The
second respondent was also estopped from suing on the same matter which had been a subject for
determination by some other shareholders of the company. On the issue of libel, the court indicated the
report was not done out of malice and could not amount to libel. On the wrongful detention of the title
deeds, the court held the deeds were deposited for subsequent loans as well and not just for the initial
loan. On the issue of deceit, the court held that, since the regulations allowed the company to take
loans, the use of the title deeds to offset the company’s indebtedness to the appellant did not amount
to deceit and besides all those transactions benefitted the company and not the managing director.
Lastly, on the matter of being illiterate and therefore unable to understand the transactions properly,
the court held that a person who seeks to bind another with a document must prove it was read and
interpreted to his understanding and on the evidence this was done as required by law.
The key principle in this case inter alia is that, in any wrong to and by a company, the company alone can
sue and be sued (Foss v Harbottle Rule). There are exceptions to this rule not discussed in this case.

DownloadSave

Bank of West Africa Ltd. V. Appenteng and AnotherThis is a Ghanaian Company Law case which
discussed inter alia right of shareholder to sue, estopeletc. It considered of four consolidated actions
against the appellants (Bank of West Africa). This wasan appeal by the Bank of West African against
judgement entered for the first and second plaintiffs(now respondents). The first three actions were by
the first respondents. The first respondent, a director of Mpotima Ltd alleged he deposited his title
deeds to enable thecompany secure a loan of 8,000 but on repayment of the loan, the appellants issued
another loan of11,000 to the company without his knowledge and consent. He further alleged in a
separate actionthat he had deposited some other properties to the appellants as guarantee for a loan to
be given tothe managing director of Mpotima ltd which was in fact not given as a fresh loan but to cove
anexisting loan. He further averred that he was an illiterate and did not understand the implications
ofthe execution of the deeds. As part of his actions, he alleged the appellants wrote a letter
topotential buyers of his properties indicating he (first respondent) was not known to the bank.
Hetherefore sued for release of his properties, damages for wrongful detention of his property,
deceitand libel.The second respondent, wife of the managing director, alleged she has also deposited
title deeds fora loan to be given to the company but after repayment, the appellants detained her title
deeds. Shealso sued for damages for negligent advice given by the appellants to Mpotima which
resulted incross firing of cheques and subsequent liquidation of same which she suffered loss as a
shareholder.The issue for determination was whether or not the appellants wrongfully detained the title
deeds ofthe first and second respondents, whether the appellant’s response that they did not know the
firstrespondent amounted to libel, and whether or not the appellants negligently and wrongfully
advisedthe company and if so whether the second respondent was the proper party sue.The court of
first instance held for the plaintiffs for all reliefs except for negligent advice. On appeal,counsel for the
appellants argued that the title deeds were not deposited for a specific loan, insteadit was for
subsequent ones as well. He further submitted that, the first respondent had no accountwith the
appellants and thus, the officer’s response was a report to that effect. Lastly, he submittedthat if there
was any negligent advice at all, the property party to sue was the company and not thesecond
respondent.The court held allowing the appeal, on the issue of negligent advice that the second
respondentcould not sue because, as a general rule, only the company can sue for wrong done to it
(Foss vHarbottle cited) and besides the weight of the evidence did not support the allegation of
wrongadvice. The second respondent was also estopped from suing on the same matter which had been
asubject for determination by some other shareholders of the company. On the issue of libel, thecourt
indicated the report was not done out of malice and could not amount to libel. On
thewrongful detention of the title deeds, the court held the deeds were deposited for subsequent
loansas well and not just for the initial loan. On the issue of deceit, the court held that, since
theregulations allowed the company to take loans, the use of the title deeds to offset the
company’sindebtedness to the appellant did not amount to deceit and besides all those transactions
benefittedthe company and not the managing director. Lastly, on the matter of being illiterate and
thereforeunable to understand the transactions properly, the court held that a person who seeks to
bindanother with a document must prove it was read and interpreted to his understanding and on
theevidence this was done as required by law.

The key principle in this case inter alia is that, in any wrong to and by a company, the company alonecan
sue and be sued (Foss v Harbottle Rule). There are exceptions to this rule not discussed in thiscase.

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