UNIVERSAL MERCHANT BANK LTD vrs ABI CAPITAL FINANCIAL (J4/72/2023) [2025] GHASC 5 (22 January 2025)

IN THE SUPERIOR COURT OF JUDICATURE IN THE SUPREME COURT ACCRA – A. D. 2025 CORAM: SACKEY TORKORNOO (MRS.) C. J (PRESIDING) AMADU, JSC PROF. MENSA-BONSU (MRS.), JSC ASIEDU, JSC DARKO ASARE, JSC CIVIL APPEAL NO: J4/72/2023 22ND JANUARY, 2025 UNIVERSAL MERCHANT BANK LTD. PLAINTIFF/APPELLANT/ (FORMERLY MERCHANT BANK … RESPONDENT/CROSS APPELLANT (GH) LTD.) VRS. 1. ABI CAPITAL FINANCIAL SERVICES LTD. … 1ST DEFENDANT 2. PETER ILIASU … 2ND DEFENDANT/RESPONDENT/ APPELLANT/CROSS RESPONDENT Page 1 of 83 JUDGMENT TANKO AMADU JSC INTRODUCTION 1. My Lords, it is settled company law and practice underpinning the principle of corporate governance that, Directors of companies stand in a fiduciary relationship with the Company. By that relationship, which has statutory support, directors are expected to, at all times, act in good faith and protect the lawful interest of the company. This obligation becomes more profound, when, the Director is in charge of the management and administration of the company. 2. The law however, eases the rigidity of doing business, and running the affairs of a company. Thus, a Managing Director who is one of the principal organs of a company is ordinarily vested with powers that allow for the efficient running of the corporation subject to the approval of the Board of Directors. In the event however that, these powers are deliberately abused in an inimical fashion, legal consequences arise resulting in personal liability of the Managing Director for the deliberate or reckless management of the company. Such a situation becomes more apparent where the Managing Director Page 2 of 83 engages in violations of statute, company policy or resolutions of the Board of Directors or of the Company in general meeting. 3. These observations are what characterise and inform our determination of the instant appeal. The 2nd Defendant/Respondent/Appellant/Cross-Respondent (hereinafter simply referred to as “the 2nd Defendant”) is a former Managing Director of the Plaintiff/Appellant/ Respondent/Cross-Appellant (hereinafter referred to as “the Plaintiff”) Bank. He was alleged to have abused his office to the benefit of the 1st Defendant. In consequence, he was stripped of his employment status with the Bank. The Bank sought through proceedings at the High Court to demand damages and recovery of certain sums which the Bank claims to have been unlawfully deprived of. Whereas the trial court agreed with some of the Plaintiff’s claims, the Court of Appeal reversed substantially that decision. Dissatisfied with the judgment of the Court of Appeal, the parties have appealed to the Supreme Court. BACKGROUND Page 3 of 83 4. On 12th May 2011, the Plaintiff, issued out of the Registry of the High Court a writ of summons and a statement of claim, claiming against the Defendants jointly and severally the following reliefs: a. An order against the Defendant jointly and severally for the immediate repayment of GHC349,593.75. b. Interest at the Plaintiff Bank prevailing commercial lending rate from 21st April, 2010 to the date of full and final payment. c. A declaration that the 2nd Defendant acted in breach of his duties toward the Plaintiff and damages for breach of duty. d. Cost on full indemnity basis. SUMMARY OF CASE AT THE TRIAL COURT THE PLAINTIFF’S CASE 5. The factual basis for the Plaintiff’s claims per his writ and statement of claim are that, sometime in 2010, the 2nd Defendant executed a consultancy agreement with the 1st Defendant. By that agreement, the 1st Defendant was expected to render some consultancy services to the Plaintiff Bank. Page 4 of 83 6. Acting on the agreement, per a letter dated on 4th March 2010, the 1st Defendant requested from the 2nd Defendant the payment of a brokerage fee of USD$247,500.00 as facilitation fee for a trade finance deal worth USD$33 million in favour of the Volta River Authority (VRA), a long-standing customer of Plaintiff. 7. It is the contention of the Plaintiff that, the 2nd Defendant without the consent of VRA nor approval from the Bank’s Board and while not conforming with the policies of the Bank and the regulator, Bank of Ghana, authorised payment of the cedi equivalent of the sum of USD$247,500.00 as brokerage fee into the account of the 1st Defendant by debiting the account of VRA. 8. When VRA discovered the debit charge, and challenged the payment, the Plaintiff was compelled to refund the sum to VRA. The Plaintiff finds the said conduct of the 2nd Defendant a breach of duty and the fiduciary obligations he owed the Plaintiff. THE CASE OF THE 1ST DEFENDANT AT THE TRIAL COURT 9. In its Statement of Defence filed on the 28th of June 2011, the 1st Defendant contended that, on 1st March 2010, it entered into an agreement with the Page 5 of 83 Plaintiff Bank as a marketing consultant to among other things, promote the business of the Plaintiff in sourcing business from corporate bodies. 10. 1st Defendant claimed that, it submitted proposals on a receivable backed financial structure for VRA and based on that, the 1st Defendant was asked to carry out due diligence on the VRA which it did and a report issued to that effect. It is the case of the 1st Defendant that, based on the report, the VRA entered into a trade finance transaction worth USD$33 million for which the 1st Defendant was paid for its service. THE 2ND DEFENDANT’S CASE AT THE TRIAL COURT 11. In his Statement of Defence filed on the 6th day of June 2011, the 2nd Defendant contended that, the agreement entered into, and his conduct pertaining to the entire transaction was lawful and proper in his normal course of business. He contended that, the same was within his discretion power, authority as the Managing Director of the Plaintiff Bank and hence, any payments made were lawful. He contended further that, the negotiations made between the Plaintiff and VRA was done with the Plaintiff Bank and not with him in his personal capacity. His role, according to him, was to merely approve the recommendations of the corporate Banking team of the Plaintiff as it fell within the scope of his authority as Managing Director. Page 6 of 83 12. The 2nd Defendant underscored being aware of the statutory restrictions on the transaction hence, he invited other Banks to participate in same and the Chairperson of the Plaintiff also gave her approval to the transaction. He further asserted that, the VRA was aware of the transaction and the said debit on the account is the normal course of debits when due diligence is conducted. For the 2nd Defendant, the refund of the money was not his decision hence he cannot be liable to the Plaintiff on any alleged loss therefrom. 13. The 2nd Defendant averred that, the Board chair incessantly interfered with the prudent corporate practices of the bank and that the suit was commenced upon failure of the Board Chair to prosecute him. He further averred that, his removal from office was wrongful, as he was not given adequate opportunity to be heard and the said removal did not comply with due process. He counterclaimed for the following reliefs: i. Damages for wrongful termination. ii. An order for the payment by the Plaintiff Bank of all entitlements to the 2nd Defendant. iii. Interest on (i) and (ii) supra Page 7 of 83 iv. An order for the immediate re-instatement of the 2nd Defendant to his post as Managing Director and member of the Board of Directors of the Plaintiff Bank. v. Costs. vi. Any other relief found due. 14. In reply to the 2nd Defendant’s defence, the Plaintiff maintained that the 2nd Defendant was reckless, acted in bad faith and in breach of his duties. Plaintiff further reiterated that, the termination of the employment of the 2nd Defendant was lawful and consistent with sound and due process as 2nd Defendant was guilty of gross misconduct and has infact admitted his wrongful acts. 15. At the close of pleadings, the following issues were set down for determination by the trial court: a. Whether or not the alleged due diligence service by the 1st Defendant was borne out of the Agreement dated 1st March 2010? b. Whether or not the 1st Defendant provided brokerage or due diligence service to the Bank towards the grant of the USD$33 Million facility to the VRA? Page 8 of 83 c. Whether or not the Agreement dated 1st March, 2010 and made with the 1st Defendant was bona fide? d. Whether or not 1st Defendant having described the fees paid to it as brokerage fees, is estopped from asserting that it provided due diligence services resulting in the grant of the facility to VRA? e. Whether or not the amount of USD$247,500.00 paid to the 1st Defendant as brokerage fee by the 2nd Defendant was provided for in the Agreement entered into with the 1st Defendant. f. Whether or not the 2nd Defendant had authority to authorise an expenditure of USD$247,500.00? g. Whether or not the 2nd Defendant required the express authority and approval of the Bank’s Board of Directors to grant the facility of USD$33 million to VRA. h. Whether or not the 2nd Defendant authorised the grant of the facility to VRA without the authority and approval of the Bank’s Board of Directors? i. Whether or not the termination of the 2nd Defendant’s appointment as Managing Director was wrongful? Page 9 of 83 j. Whether or not the 2nd Defendant having admitted his various acts of misconduct and apologized, is estopped from asserting that the termination of his appointment is wrongful. k. Whether or not the 2nd Defendant is entitled to his counterclaim? l. Any other issue (s) arising from the pleadings. JUDGMENT OF THE TRIAL HIGH COURT 16. On the 11th of May, 2015 the trial High Court delivered judgment dismissing all the claims of the Plaintiff Bank and granting all the reliefs of the 2nd Defendant, save the prayer for reinstatement. In the said judgment, the trial Court reasoned that, although the transaction approved by the 2nd Defendant was illegal in contravention of Section 42 of the Banking Act, 2004 (Act 673) the same was enforceable against the Bank since it benefited. 17. The trial court made the following crucial findings of facts in its delivery: i. That Exhibit “AF” (Consultancy Arrangement Between ABI Capital Limited and Merchant Bank Limited) was executed by the responsible officers of the parties. Page 10 of 83 ii. That due diligence service by the 1st Defendant was borne out from the Agreement dated 1st March 2010. iii. That the 2nd Appellant conducted financial due diligence based on the contract dated 1st March, 2010. iv. That the transaction being the grant of the US$33 million facility to the VRA was illegal. v. That the Respondent adopted and affirmed the acts of the 2nd Appellant which acts included the Letters of credit to the VRA and the due diligence services provide by the 1st Appellant. vi. That the 2nd Appellant was not given an opportunity to respond to the query. vii. That the termination of the employment of the 2nd Appellant was wrongful. APPEAL TO THE COURT OF APPEAL Page 11 of 83 18. Per an amended notice of appeal dated the 26th of April 2021, the Plaintiff appealed the judgment of the trial court to the Court of Appeal. In a judgment delivered on the 19th day of October 2022, the Court of Appeal reversed the judgment of the trial court. The 1st appellate court upheld the bank’s relief seeking a declaration that the 2nd Defendant acted in breach of his duties and awarded damages of GHs20,000.00 to the Plaintiff. The court also set aside the judgment on the 2nd Defendant’s counterclaim. In its delivery, the Court of Appeal also made these pertinent findings of facts: i. That due diligence service was provided for by the 1st Defendant and the same was duly paid. ii. That the Respondent is bound by the agreement executed on its behalf by the 2nd Defendant. iii. The penalty provisions under Section 43(4) of the Banking Act, 2004 (Act of the Banking Act makes the Letters of Credit transaction voidable and not void. iv. The termination of the 2nd Defendant’s employment was not wrongful. v. The Letters of Credit transaction executed is enforceable. vi. The 2nd Appellant was in breach of his duties towards the Respondent and the conditions of his employment. Page 12 of 83 APPEAL TO THE SUPREME COURT 19. Dissatisfied with the judgment of the Court of Appeal, the 2nd Defendant by a notice of appeal dated the 23rd of November 2022 appealed to this court on grounds formulated and set out in the notice of appeal as follows: - a. The judgment of the Court of Appeal is completely against the weight of evidence on record. b. The Court of Appeal fell into error in failing to give appropriate weight to the admission by the Chief Internal Auditor that he had not confronted the person against whom negative audit findings has been made nor obtained their reactions or explanations for the forwarding along with the reports (interim and final) to the Board and upon which the Board acted to the detriment of the 2nd Defendant/Respondent/ Appellant. c. The Court of Appeal fell into grievous error in concluding that the 2nd Defendant/ Respondent/Appellant had been given a fair hearing given the facts on record. Page 13 of 83 d. The Court of Appeal fell into a grievous error in finding and concluding that the 2nd Defendant/Respondent/Appellant had breached his terms of employment thereby justifying the termination of his employment contract. e. The dismissal of the 2nd Defendant/ Respondent/Appellant’s counterclaim was wholly unjustified both on the facts and the applicable statutes and judicial precedents. f. The damages awarded against the 2nd Defendant/Respondent/Appellant be set aside in its entirety. 20. On the 30th day of November 2023, the 2nd Defendant filed additional grounds that the Court of Appeal: g. Erred in reversing the damages awarded to the 2nd Defendant; and h. Erred in its assertion that the trial judge erroneously focused on the explanations given by the Respondent for granting the facilities rather than the breach of the Credit Manual Policy. 21. The Plaintiff also, filed a notice of cross-appeal and set out the following grounds: Page 14 of 83 a. The Court of Appeal erred when it refused to order recovery of the Marketing Consultancy Fee paid to the 1st Defendant. b. The Court erred in holding that the 1st Defendant was entitled to assume that the 2nd Defendant had the authority to authorise the payment made; and c. The Court of Appeal’s failure to order restitution of the payment received by the 1st Defendant is against the weight of the evidence. COMPETENCE OF GROUNDS OF APPEAL 22. This court has on numerous of occasions expressed disapproval with non-compliance with the mandatory procedural requirements under the Supreme Court Rules, 1996 (C. I. 16) pertaining to the formulation of grounds of appeal. Our Rules mandate a special manner in the formulation of grounds of appeal. The grounds must neither be narrative, argumentative nor vague in their formulation. Where an appellant alleges an error of law, or misdirection against the judgment being appealed against that, Appellant is obligated to set out the particulars of the said errors or misdirection. It is important to stress that, although an appeal is by way of rehearing, the obligation to this court to engage in a re-hearing of the appeal is guided by the ground rules of the court. The court cannot, upon the mere filing of a notice of appeal with Page 15 of 83 inappropriate grounds now suo motu seek to search for errors in the judgment being appealed from to impeach the judgment. The policy simply is that, in our adversarial system of justice, courts do not veer into the arena of conflict and neither can the court set up a case for a party unless in exceptional situations permissible by the ground rules of the court or as established by judicial precedent. 23. Moreover, this Court has in previous decisions cautioned against the practice where an appellant raises the omnibus ground of appeal in that, judgment being appealed from is against the weight of evidence, and still decide to as it were, to set out other grounds which invariably are allegations of improper evaluation of the evidence on record. It has been the settled position of this Court that, such other grounds which attack the proper or improper evaluation of the evidence on record all fall within the scope of a determination of the omnibus ground based on it’s incidents as established through the cases. It must be placed on record that, it is not the repetitive formulations of grounds of appeal on matters of evidence which will persuade the appellate court. What is crucial is the demonstration of the error in the evaluation within the context of the statutory evidential burden of either party at the trial which is of crucial importance in determining issues based on the evidence on record. Page 16 of 83 24. That said, save the omnibus ground of appeal, we find that, the rest of the 2nd Defendant’s grounds of appeal substantially contravene the provisions of Rule 6(5) of C. I. 16 which regulate the proper formulation of grounds of appeal. 25. The 2nd Defendant’s Ground “b”, formulated thus “the Court of Appeal fell into error in failing to give appropriate weight to the admission by the Chief Internal Auditor that he had not confronted the persons against whom negative audit findings had been made nor obtained their reactions or explanations for forwarding along with his reports (interim and final) to the Board and upon which the Board acted to the detriment of the 2nd Defendant” does not only fail to give particulars of the error as alleged but the same is both argumentative and narrative. Rule 6(4) of C. I. 16 provides that, “The grounds of appeal shall set out concisely and under distinct heads the grounds upon which the Appellant intends to rely at the hearing of the appeal, without any argument or narrative and shall be numbered seriatim; and where a ground of appeal is one of law the appellant shall indicate the stage of the proceedings at which it was first raised.” 26. Further both Grounds “c” and “d” alleging errors fail to give the necessary particulars of the said errors. Ground “e” has been formulated in general terms without any specificity in their import contrary to Rule 6(5). With respect to Ground “f”, I am at a loss why the same is a ground of appeal. Page 17 of 83 The ground reads: “The damages awarded against the 2nd Defendant be set aside in its entirety.” Clearly, this ground is actually a relief and not a ground of appeal. 27. Even with the formulation of the omnibus ground of appeal as filed, the word: “completely” is needless. The Plaintiff formulated the same as “The judgment of the Court of Appeal is completely against the weight of evidence.” The omnibus ground has been given statutory recognition in its formulation. For instance, Rule 6(5) of C. I. 16 provides that: ” No ground of appeal which is vague or general in terms or discloses no reasonable ground of appeal shall be permitted, except the general ground that the judgment is against the weight of evidence; and any ground of appeal or any part of it which is not permitted under this rule may be struck out by the Court on its own motion or on application by the Respondent.” 28. While this court has on special occasions saved grounds of appeal albeit improperly formulated, having regard to the fact that, issues deciphered from the Plaintiff’s grounds can be conveniently dealt with under the omnibus ground, and those grounds are simply at variance with the mandatory requirements of the rules, we shall and do hereby strike out Page 18 of 83 grounds “b”, “c”, “d”, “e” and “f” as well as the grounds set out in the further grounds of appeal filed by the 2nd Defendant. 29. Consequently, the 2nd Defendant’s appeal will be determined on the basis of the omnibus ground only which is that, the judgment of the Court of Appeal is against the weight of evidence. In my view all the issues arising from the struck out grounds can be conveniently and sufficiently dealt with and determined on the basis of the omnibus ground. The above approach is consistent with the practice of this court in the case of INTERNATIONAL ROM LTD. VS. VODAFONE GHANA LIMITED & ANOTHER CIVIL APPEAL NO. J4/2/2016 DATED 6TH JUNE 2016 where Akamba JSC articulated the position of this court within the context of the requirements of Rules 6(4) and (5) of C. I.16 as follows: “Thus the 1st Defendant’s so-called grounds of appeal when juxtaposed with the above requirement reveals an obvious non-compliance with the rules of court. Undoubtedly it is only in an atmosphere of compliance with procedural rules of court would there be certainty and integrity in litigation. All the so called grounds filed by the Appellant (above) are general, argumentative and narrative and to that extent non-compliant with Rule 6 Sub-rules 4 and 5 of C. I.16. They are struck out. In order not to yield overly to legal technicalities to defeat the cries of an otherwise sincere litigant we would and hereby substitute them with what actually emerges as the core complaint and Page 19 of 83 general ground which is that; “the judgment is against the weight of evidence”. It does appear that the magnanimity exhibited by this court over these obvious lapses and disrespect for the rules of engagement is being taken as a sign either of condoning or weakness hence the persistence of the impunity. It is time to apply the rules strictly. . . In AYIKAI VS. OKAIDJA III [2011] SCGLR 205 this court did stress that non-compliance with the rules of court have very fatal consequences for they not only constitute an irregularity but raise issues that go to jurisdiction. This appeal being premised upon the contention that the judgment is against the weight of evidence, among others, is a call on us to rehear this appeal by analyzing the record of appeal before us, taking into account the testimonies and documentary as well as any other evidence adduced at the trial and arriving at a conclusion one way or the other. . . ” 30. Like the 2nd Defendant, Grounds “a” and “b” in the Plaintiff’s notice of cross appeal do not set out the particulars of the error complained of by the Plaintiff. The issues raised in the notice of cross-appeal will also be conveniently dealt with under the omnibus ground of appeal. Since both grounds can be determined for a re-evaluation of the evidence on record. EVALUATION OF THE EVIDENCE ON RECORD Page 20 of 83 31. When an appeal is anchored on the omnibus ground of appeal that, the judgment appealed from is against the weight of evidence, what the Appellant is simply alleging is that, the evidence adduced at trial and on record was not properly examined leading to an erroneous decision. In other words, by pleading this ground, the supposition is one of a misapprehension of the law to the evidence, or the inclusion of irrelevant evidence during the evaluation, or the exclusion of relevant evidence or simply a misappreciation or misdirection regarding the allocation of the burden of proof. In any such situation, this court and more importantly, as the final appellate court is obligated to examine the entire record and right all wrongs characterising the inappropriate evaluation of the evidence. As a duty, the Appellant is also, under an obligation to point out the respective errors alleged to have characterised the judgment alleged to be against the weight of evidence. These principles have been sustained in various judgments of this court including, but not limited to: TUAKWA VS. BOSOM [2001-2002] SCGLR 61; DJIN VS MUSAH BAAKO [2007]2008] SCGLR 686. 32. From a reading of the respective statements of case filed by the parties, this appeal can be conveniently determined under four issues namely: a. Whether the 2nd Defendant breached his duty to the Respondent, if so Page 21 of 83 b. Whether the Plaintiff is entitled to damages as a result of the breach of duty c. Whether the Court of Appeal was wrong in not awarding the recovery of GHC349,593.75 in favour of the Plaintiff d. Whether the 2nd Defendant’s employment was wrongfully terminated. BREACH OF DUTY AND ENTITLEMENT TO DAMAGE 33. It is incontrovertible that, the 2nd Defendant, at all material times leading to the transaction informing the dispute, was the Managing Director of the Respondent’s Bank. Being a director of the company, the law places the 2nd Defendant in a fiduciary relationship. That is a relationship of trust which demands utmost care, diligence and circumspect in the pursuit of the affairs of the company. 34. Sections 203 through to 208 of the Companies Act, 1963 (Act 179) the statutory regime which regulated the transaction and prevailed upon the commencement of the suit provide for these duties. Section 203 of Act 179 provides that: “A director of a company stands in a fiduciary relationship towards the company and shall observe the utmost good faith towards the Page 22 of 83 company in a transaction with it or on its behalf.” Being placed in a fiduciary situation as a director in relation to a company enjoins loyalty to the company and thus acting in good faith. At all times, the director is expected to consider the interest of the company as being paramount. It further commands the director to ensure that, the regulations and polices of the company are adhered to in the interest of the company. The Director is prohibited from making secret profits. As was held in COMMODORE VS. FRUIT SUPPLY (GHANA) LTD. [1977] 1 GLR 241, a Director of a company is not entitled to keep profits of conflicting transactions entered into unless otherwise sanctioned by the Regulations of the Company. 35. Further Section 203 (2) of Act 179 provides that: “A director shall act at all times in what he believes to be the best interests of the company as a whole so as to preserve its assets, further its business, and promote the purposes for which it was formed, and in such manner as a faithful, diligent, careful and ordinarily skillful director would act in the circumstances.” While Sub-sections 3 and 4 also provide thus: 3. In considering whether a particular transaction or course of action is in the best interest of the company as a whole a director may have regard to the interests of the employees, as well as the members, of the company, and, when appointed by, or as representative of, a special Page 23 of 83 class of members, employees, or creditors may give special, but not exclusive, consideration to the interest of that class. 4. No provision, whether contained in the Regulations of a company, or in any contract, or in a resolution of a company shall relieve any director from the duty to act in accordance with this section or relive him from any liability incurred as a result of any breach thereof. 36. In entering into any transaction therefore, the director must, assess, as a duty, whether the same as a whole is in the best interest of the company. This test, was sustained by the English Courts in the case of CHARTERBRIDGE CORPORATION LTD VS. LOYD’S BANK LTD. [1970] CHANCERY 62 as follows: “The proper test, I think, in the absence of actual separation consideration, must be whether an intelligent and honest man in the position of a director of the company concerned, could, in the whole of the existing circumstances, have reasonably believed that the transactions were for the benefit of the company.” 37. While the Companies Act vests directors with certain powers in furtherance of their duties to companies, the said powers should only be for their proper purpose. Section 204 of Act 179 provides; Page 24 of 83 “The Directors shall not, without the approval of an ordinary resolution of the company, exceed the powers conferred upon them by this Code and the company’s Regulations or exercise such powers for a purpose different from that for which such powers were conferred notwithstanding that they may believe such exercise to be in the best interests of the company.” 38. Within the context of the above provision, there is an injunction on directors of companies from using their powers for purposes other than that which have been given them by the Regulations of the Company and the Act. In HOWARD SMITH LTD. VS. AMPOL PETROLEUM LTD. [1974] AC 821, certain shares had been issued to particular shareholders in pursuance of a takeover bid rather than to raise capital for the company. There had been rival bids. The majority favoured one bid while the Directors favoured a different bid which would end up placing the majority in a minority situation. The Privy Council held that, the issue of the shares was an improper exercise of the powers of the directors, as the same as designed would thwart the wishes of the majority of the shareholders. 39. Indeed, the common law, law and the statutory regimes are informed by the fact that in running a company, directors carry the affairs of the company hence when the directors are given the power to run the company, they should be deemed to have the authority to bind the company. Section Page 25 of 83 137 (3) of Act 179 provide that: Except as otherwise provided in the company’s Regulations, the business of the company shall be managed by the board of directors who may exercise all such powers of the company as are not by this Code or the Regulations required to be exercised by the members in general meeting. The above provision seeks to relieve third parties dealing with a company from the need to check any limitations on the authority of the Board which may be contained in the Regulations of the Company or Resolution’s of the Company. The same is, however inapplicable where there is evidence of actual knowledge to the third party. 40. The second situation is the Rule in Turquand’s case espoused in the case of ROYAL BRITISH BANK VS. TURQUAND [1856] 6ErB 327 to the effect that, a person dealing with a company in good faith should assume the absence of any limitation under the Company’s Regulations as regards the power of the board of directors to bind the company or authorise others to so do. 41. Instructively, in the 2nd Defendant’s employment contract, he undertook to uphold the rules, regulations and/or directives of the Bank as set out in the Bank’s Credit policy. Under clauses 2.3 and 2.4, the 2nd Defendant agreed to at all times, keep the Board of Directors promptly and fully informed of the conduct of the business of the Bank and provide such Page 26 of 83 explanations as may be required therewith, and would ensure that all statutory obligations of the Bank are met. 42. From the evidence on record, there is no formal correspondence or briefing from the 2nd Defendant to the Board of Directors of the Plaintiff Bank prior to the credit facilities he granted. Further, the 2nd Defendant himself concedes that, the amount granted was in excess of the allowable limits imposed on the Bank under Act 673. It is therefore quite clear, and as acknowledged by the 2nd Defendant himself that, he was under a duty not to exceed the authorised limits as well to seek prior approval of the Board before embarking on the transactions in issue. Indubitably therefore, the 2nd Defendants conduct is tantamount to a breach of his duties as a fiducial. 43. Having so found should the Plaintiff be entitled to damages for breach of duty? As we observed in the concurring opinion in the recent decision in EDEM AFFRAM AND NANA OBUOR NIMAKO VS. BERNARD YAW OWUSU-TWUMASI, OAK HOUSE COMPANY LTD. AND ANOTHER, CIVIL APPEAL NO. J4/47/2021 DATED 15TH FEBRUARY 2023 where there is a breach in fiduciary duties, it necessitates that the affected party is compensated for the injury suffered. There being no doubt about the breach of duty occasioned by the 2nd Defendant’s conduct. Therefore, the award of Twenty Thousand Ghana Cedis (Ghc20,000.00) in favour of the Plaintiff as Page 27 of 83 damages is in my view appropriate. The measure of the said compensation in favour of the Plaintiff is hereby affirmed. REMOVAL OF THE 2ND DEFENDANT AS MANAGING DIRECTOR 44. There is enough jurisprudence on the procedure to remove a director under Act 179. The Act itself provides under Section 185(1) that: “…a company may by ordinary resolution at any general meeting remove from office all or any of the directors notwithstanding anything in its Regulations or in any agreement with any director.” 45. The procedure for removing a director of a company under Act 179 is generally governed by Section 185 of the Act. Under Section 185 of Act 179, notwithstanding the language of the Regulations of a company, members or shareholders in an ordinary resolution may remove a director from office after notifying the said director of their intention to remove him and giving him an opportunity to be heard. As explained by Professor Gower under the commentary section to section 185 of his report: “… the section following the English Act, provides safeguards to ensure that the audi alterem partem principle of natural justice is Page 28 of 83 observed, so that the director concerned cannot be removed from his office without a full opportunity of stating his case. This is necessary, not only in his own interest but also in that of the members; it may be that his fellow directors want to secure his removal because he has been more scrupulous than they have in protecting the interests of the shareholders.” 46. Thus, although a company may remove a director, such removal must be in accordance with due process as detailed in the Act. Under the Act, of essence is the requirement of notice and fair hearing. 47. Consequently, if the procedure under Section 185 is followed, a director will be deemed to have been validly removed. In OKUDJETO VS. IRANI BROTHERS [1974] 1 GLR 374, the court noted that, it will be slow to interfere in the exercise of members’ right to remove directors unless where the members failed to follow the procedural provisions of the regulating statute, that is; the Companies Act 1963 (Act 179). 48. Therefore, before a resolution to remove a director can be moved at a general meeting, Section 185(2) requires that thirty-five (35) days’ notice of the intention to move the notice must be given to the company. Upon being notified, Section 185(4) of the required that, the company gave members thirty-five (35) days’ notice of the resolution. However, where it was not Page 29 of 83 practicable to give the thirty-five (35) days’ notice, the law allowed a shorter notice of twenty-one (21) days to be given. Section 185(5) demanded that, copies of the notice must also be served on the director concerned not less than thirty-five (35) days before the intended meeting. Whether or not the director was a member of the company, the director was entitled to be heard on the resolution at the meeting and to send to the company a written statement, copies of which the company shall send with every notice of the general meeting or, if the statement is received too late, the company shall forthwith circulate to every person entitled to the notice. 49. However, Section 185(6) relieved the company from circulating the written statement if same was received less than seven (7) days to the meeting or if the court on application by the company or any other person who claims to be aggrieved orders that the statement is unreasonably long or that the rights conferred under Section 185 was being abused to secure needless publicity for defamatory matter. In giving the director a hearing at the meeting, the director may upon request demand the written statement to be read at the meeting. This is the language of Section 185(7). It must be emphasised that under Section 185(9), the right of a director who has a service agreement with the company to compensation is not discarded upon removal. Under the section, the director’s right to compensation or damages must still be respected. Page 30 of 83 50. In a nut shell, Section 185 of the Act requires that, before a director be removed, notice of the removal must be served on the director at least thirty- five (35) days before the meeting to remove him and the director must also be given an opportunity to be heard. 51. It is however important to observe, that, the common-law allows for a summary dismissal where a director is guilty of gross misconduct. Reference is made to the decision of this court in the case of in AWUKU-SAO VS. GHANA SUPPLY CO. LTD. [2009] SCGLR 710 where it was held inter alia that: “At common law, unaffected by public law considerations, it was enough if the fact upon which a person had been summarily dismissed objectively established the ground or cause for dismissal. Thus, at common law, a servant whose dismissal was incompatible with the faithful discharge of his duty to his master, might be dismissed. Dismissal would also be justified in the case of a servant where his conduct has been such that it would be injurious to the master’s business to retain him”. 52. In the instant case, the evidence on record reveals that, the 2nd Defendant was actually queried. He responded to the query and the Plaintiff subjected the same through disciplinary hearing. Plaintiff’s termination of the Page 31 of 83 appointment was said to be based on an audit report Exhibit “G1” which revealed some 5 counts as per Exhibit “D” that evidences some wrongful debits attributed to the 2nd Defendant. The plaint of the 2nd Defendant is that, he was not given a fair hearing in order to put up a good defence to the allegations. This proposition is quite startling if the 2nd Defendant’s response to the query Exhibit “H” dated the 8th of August, 2010 is taken into consideration. Remarkably, he was to respond by the 9th of August, 2010 but he was able to do that by the 8th of August, 2010. It is therefore difficult to appreciate how the 2nd Defendant now alleges wrongful termination on the ground of absence of fair hearing when he was afforded the opportunity. We would therefore accept the finding of the Court of Appeal on this issue and affirm that, the termination of employment with the Plaintiff of was not wrongful. PLAINTIFF’S CROSS APPEAL 2ND DEFENDANT’S AND THE RECOVERY OF THE GHC 349,593.75. 53. In the cross-appeal, the Plaintiff faults the refusal of the Court of Appeal to order the recovery of the Ghc349,593.75. This issue is, in our view, best resolved through the application of the Turquand’s principle and its exceptions. While third parties are to assume compliance with the internal regulations of the company, that assumption is non-existent if they actually Page 32 of 83 had actual or constructive knowledge of the irregularity. Constructive knowledge is determined on the peculiar factual circumstances of each case. 54. From the evidence on record, we find Exhibit “10” as poignant in its communication to the 1st Defendant that, the transaction of USD33 million facility grant to VRA was beyond the Bank’s limit. This was ample notice to the Defendants that the transaction being entered into was irregular and illegal not being compliant with the provisions of Act 637 with respect to the Plaintiff Banks single obligor limit. The 1st Defendant cannot therefore be said to be ignorant of the internal limitations on the Bank regarding such transactions. It is for this reason, that we are of the view that, the amount of Ghc349,593.75 foistered on the Plaintiff arising from a transaction which the principal parties knew to be beyond the limits of the Plaintiff Bank ought to be refunded. Consequently, we hold that, the Defendants are jointly and severally liable to refund the said amount to the Plaintiff with interest at the Bank’s lending rate from 21st April 2010 till date of final payment. CONCLUSION 55. From the analysis of the evidence, we are of the firm view that, the 2nd Defendant acted in breach of his duties as a fiducial to the Plaintiff Bank. The Plaintiff Bank was therefore right in terminating the appointment of the 2nd Defendant. Thus, the Court of Appeal did not err in ordering a refund of the Page 33 of 83 Ghc349,593.75 which we hereby so affirm that, same be recovered from the Defendants jointly and severally with interest at the Plaintiff Bank’s lending rate from the 21st of April 2010 till date of final payment as aforesaid. 56. In the result, the 2nd Defendant’s appeal fails and it is accordingly dismissed. The cross appeal by the Plaintiff is hereby wholly allowed. (SGD.) I. O. TANKO AMADU (JUSTICE OF THE SUPREME COURT) (SGD.) G. SACKEY TORKORNOO (MRS.) (CHIEF JUSTICE) (SGD.) S. K. A ASIEDU (JUSTICE OF THE SUPREME COURT) (SGD.) DARKO ASARE (JUSTICE OF THE SUPREME COURT) CONCURRING OPINION Page 34 of 83 PROF. MENSA-BONSU JSC: This is an appeal from the judgment of Court of Appeal dated 19th October 2022, which had affirmed in part, and dismissed in part, the decision of the trial High Court. FACTS Appellant’s case was that Volta River Authority (VRA) had been the customer of plaintiff/appellant/respondent and cross-appellant Bank since 1972, and had enjoyed letters of credit (LC) including some up to $10 million approved by the Board of plaintiff/appellant/respondent and cross-appellant Bank. (On account of the various appeals, the original nomenclature of ‘plaintiff-bank’ to describe the respondent-cross appellant, and ‘2nd defendant’ to describe the appellant herein would be adopted for clarity.) The plaintiff-Bank’ contends that per its credit policy the Credit Committee chaired by 2nd defendant could only grant up to $250,000 and that only its Board of Directors (hereinafter, the ‘Board’) could approve requests in excess of $5 million and up to 25% the Bank’s net worth. Further, that by Banking Act 2004 (Act 673) the net worth of the plaintiff-Bank being $40 million, the limit the plaintiff-Bank could grant was $10 million. Page 35 of 83 The plaintiff-Bank’s case is that without authorisation by the bank, the 2nd defendant (plaintiff-Bank’s Managing Director, (MD)) granted 3 facilities in the form of revolving credit in the sum of $33m each to suppliers of VRA for the purchase of light crude oil for the generation of electric power. It is contended that the LC granted by 2nd defendant was far in excess of the $10 million statutory limit of the Bank as per Act 673 and was clearly ultra vires the authority of 2nd defendant. Further that 2nd defendant entered into an unauthorised agreement with the 1st defendant to undertake a financial due diligence on VRA in respect of the proposed LC (now impugned), and was paid an amount of Gh¢349,593.75 (the equivalent in cedis of $247,500). This amount was paid out of VRA’s account for services described as “marketing or brokerage services” and “financial due diligence”. This agreement was not supported by any prior agreement, consent, or authorization from VRA. VRA therefore challenged the payment and it was therefore reversed and absorbed by plaintiff-Bank, and a refund made to VRA. Consequently, plaintiff- Bank contended that the payment was fraudulent and a sham. Further, the plaintiff-Bank’s case is that the 2nd defendant owed his employer Bank a fiduciary duty to act at all times in the best interest of the Bank, and to comply with all rules, regulations and policies of the Bank and that he failed to do this. Again, that the payment made to 1st defendant created a conflict of interest situation and was motivated by personal gain and that the LC transaction was void and ought not to stand. Page 36 of 83 2nd Defendant was therefore asked to refund the payment made to the 1st defendant. When this was not done, the Bank sued out on a writ seeking: a) An order against Defendants jointly and severally for immediate payment of Gh¢349,593.75. b) Interest at present prevailing commercial lending rate from 21st April 2010 to date of full and final payment. c) A declaration that 2nd Defendant acted in breach of his duties towards the Plaintiff and damages for breach of duty. The case for the 1st defendant was that it was at the request of plaintiff-Bank that it carried out due diligence on VRA in respect of LC facility and that the plaintiff-Bank was satisfied with the report and paid agreed fees per the invoices submitted. Further that at all material time, it dealt with the 2nd defendant as Managing Director under the assumption that he had authority to bind plaintiff-Bank, and so could not be called upon to refund fees duly earned. On his part, the 2nd defendant believed that at all material times he acted as the MD of plaintiff-Bank, and exercised powers and discretion vested in him in his capacity as M. D. Further that the charges made on the VRA account were legitimate, and were made with the prior knowledge, consent and authorization of VRA. He also averred that the impugned LCs of $33million were the single most profitable undertaking, and moved the bank from a loss-making one to a profitable enterprise; that chairperson of the Board was briefed on the transaction and she gave her full Page 37 of 83 blessing and consent to proceed with it. It was also his case that they were in competition with other banks and it would have been foolhardy not to have moved quickly. The 2nd defendant therefore counterclaimed for: i. ii. Damages for wrongful and unlawful termination An order for the payment by the Plaintiff Bank of all entitlement due 2nd Defendant iii. Interest on both (i) and (ii) An order for immediate reinstatement of the 2nd defendant as MD and member of the Board of Directors of plaintiff-Bank. The trial court found that the Consultancy Agreement with 1st defendant was duly executed by officers of plaintiff-Bank, and that the 1st defendant was duly authorized by plaintiff-Bank, acting through 2nd defendant its MD, to conduct the due diligence on VRA. The trial judge further found that the 2nd defendant acted outside the scope of the Bank’s Credit Manual Policy, and that it was contrary to section 142 of the then Banking Act. However, the plaintiff-Bank made an unprecedented profit of ¢14 million old cedis (GHS140,000) out of the illegal transaction, and not having taken steps to disaffirm the contract, it had taken the benefit of the contract and was not entitled to the reliefs. Page 38 of 83 In respect of the 2nd defendant’s counterclaim, the trial court held that the termination of 2nd defendant’s appointment was based on audit report and that he was not given a hearing or offered a reasonable opportunity to defend himself when an interim Audit report on selected customers of the plaintiff-Bank was issued. The Audit report showed that the selected accounts were performing, and that there was no financial loss occasioned to the bank, so his termination was wrongful. He was therefore awarded remuneration for a period of two years. General damages of Gh¢50,000 plus interest were awarded. His demand for re-instatement was refused. Costs of Gh¢30,000 were also awarded to the 2nd defendant. In respect of 1st defendant costs of Gh¢20,000 was awarded By Notice of Appeal filed on 7th July 2015, the plaintiff-Bank filed a notice of appeal, and by leave of the court amended grounds of appeal on 26th April 2021. The eight grounds of appeal to the Court of Appeal were: a. That judgment is completely against weight of evidence adduced at the trial. b. Trial judge erred when he disregarded Plaintiff’s plea of estoppel against 1st Respondent with regard to the conflicting descriptions of the nature of work allegedly carried out for Plaintiff by 1st Defendant. c. Having found that the LC facility granted to VRA was contrary to the Bank … the learned judge erred when he failed … to hold that all acts done under the unlawful transaction is void. Page 39 of 83 d. The trial judge erred when he departed from binding judicial precedents on the effect of breach of statute on banking transactions. e. The trial judge erred when he held that the 2nd Defendant was acting for the Plaintiff in the LC transaction and in the purported engagement of 1st Respondent. f. Having found that the 2nd Respondent granted facilities contrary to statute and made unauthorised excesses, the learned judge erred when he held that the 2nd Respondent employment termination was unlawful. g. The learned trial judge erred when he failed to order restitution of the wrongful payment made to the 1st Respondent by the 2nd Respondent. h. The learned trial judge erred when he awarded damages in favour of 2nd Respondent i. The judgment of the High Court of 11th May 2015 be set aside. DECISION OF THE COURT OF APPEAL The Court of Appeal dismissed the plaintiff-Bank’s claim that the trial High Court disregarded their plea for estoppel with regard to the conflicting descriptions of the nature of work allegedly carried out for the plaintiff-Bank by the 1st defendant. The Page 40 of 83 court indicated that no evidence aside from the amount paid to the 1st defendant was debited for any services provided by Merban Investment Holdings, a subsidiary of the plaintiff-Bank in connection with the transaction. The trial court’s decision on this was, thus, not disturbed. On the authority of Section 142 of the repealed Companies Act(Act 179), the rule in Turquand’s case as codified in sections 139 to 143 of Act 179 and Oxyair ltd vs Wood [2005] SCGLR 1057, held that there was no evidence that the 1st defendant had actual knowledge that the plaintiff-Bank’s policy manual prohibits approval of credit facility more than USD $10million; and that the 2nd defendant had acted beyond his powers as the principal of the plaintiff-Bank. The Consultancy agreement between the plaintiff-Bank and the 1st defendant was held to be enforceable against the plaintiff-Bank. The Court of Appeal found no justifiable reason to make restitution orders against the 2nd defendant for the payment made to, and received by 1st defendant. It was further held by the Court of Appeal that a contract or agreement which is against the provisions of a statute is not necessarily void but voidable, and that though the parties were in breach of section 42 of the Banking Act of 2004, the penalty provision under section 42 of the Act, 2004 made the LC transaction voidable and not void. For if a statute prohibits or proscribes the contract in its formation, performance or enforcement, it so provides in no uncertain terms. Page 41 of 83 On the termination of the employment of the 2nd defendant by the plaintiff-Bank, the Court of Appeal held that the termination was proper and lawful as the 2nd defendant was in breach of his duties towards the plaintiff-Bank with respect to the Credit Policy Manual. The Court of Appeal further stated that the 2nd defendant was given the opportunity (Exhibits G1 and H) to present his defence to the Board in compliance with the rules of natural justice. The Court of Appeal overturned the trial court’s decision under this ground, holding that the 2nd defendant’s employment termination was in accordance with the terms of his employment. The Court of Appeal on the ground of the judgment being against the weight of evidence said that the appellant failed to demonstrate same in his processes except the evidence backing the termination of the employment. Essentially, the Court of Appeal upheld the trial court’s decision that the Marketing Consultancy Agreement with the 1st defendant was valid, having been entered into by the 2nd defendant acting in his capacity as the MD of the plaintiff-Bank. The Court further said that in the absence of evidence the 1st defendant had actual knowledge that the 2nd defendant lacked the capacity to enter into the LC Agreement and by extension the consultancy agreement, they were bound by same and were to pay for the services rendered. Again, the Court of Appeal held that Appellant had failed to demonstrate how estoppel could arise against the 2nd defendant who had maintained throughout the trial that “due diligence and consultancy /marketing/brokerage are the same”. Consequently, it would not disturb the trial court’s finding on the debiting of the account of VRA for the due diligence. Page 42 of 83 The Court of Appeal further held that the LC transaction though in breach of statute is voidable and not void making the executed transaction enforceable. However, the 2nd defendant was declared by the court to have breached his duties towards the plaintiff-Bank, and the conditions his employment, thereby making the termination of his employment lawful. The judgment on counterclaim was also set aside. APPEAL TO SUPREME COURT Dissatisfied with the decision of the Court of Appeal, the 2nd defendant filed a notice of appeal on 23rd November 2022, challenging the decision of the Court of Appeal which allowed the plaintiff-Bank’s appeal in part. His grounds were as follows: “a. The judgment of the Court of Appeal is completely against the weight of evidence on record; b. The Court of Appeal fell into error in failing to give appropriate weight to the admission by the Chief Internal Auditor that he had not confronted the persons against whom negative audit findings had been made nor obtained their reactions or explanations for forwarding along with his reports (interim and final) to the Board and upon which the Board acted to the detriment of the 2nd Defendant; Page 43 of 83 c. The Court of Appeal fell into grievous error in concluding that the 2nd Defendant had concluding that the 2nd Defendant had been given a fair hearing given the facts on the record; d. The Court of Appeal fell into error in finding and concluding that the 2nd defendant/appellant breached his terms of employment thereby justifying the termination of his employment contract; e. The dismissal of the 2nd Defendant’s counterclaim was wholly unjustified both on the facts and the applicable statutes and judicial precedents; and f. The damages awarded against the 2nd Defendant be set aside in its entirety. Further grounds of appeal were filed by the 2nd defendant after seeking leave on 30th November,2023. These are that: i. In the absence of any damage suffered by the cross-appellant from any breach of duty by the 2nd defendant/appellant the plaintiff/cross appellant cannot be justified in any way whatsoever. ii. The Court of Appeal erred in reversing the award of damages from the 2nd Defendant/Appellant by the trial High Court. Page 44 of 83 1. The court of appeal erred in reversing the damages awarded to the 2nd Defendant; and 2. The Court of Appeal erred in its assertion that the trial judge erroneously focused on the explanations given by the Respondent for granting the facilities rather than the breach of the Credit Manual Policy. 3. The Court of Appeal erred when it failed to realise and hold the Plaintiff Appellant bank having failed with full knowledge to disavow both the VRA LC transaction and the 5 overdraft transactions but kept profits therefrom… By a notice of cross-appeal the plaintiff-Bank cross-appealed on the following grounds: a. That the Court of Appeal erred when it refused to order recovery of the Marketing Consultancy Fee paid to the 1st Appellant; b. The Court erred in holding that the 1st Appellant was entitled to assume that the 2nd Appellant had the authority to authorize payment made and Page 45 of 83 c. The Court of Appeal’s failure to order restitution of the payment received by the 1st Defendant is against the weight of the evidence. SUBMISSIONS OF THE PLAINTIFF-BANK /RESPONDENT The Plaintiff-Bank submitted that it was in agreement with the decision of the Court of Appeal to reverse the trial High Court’s decision on the 2nd defendant’s breach of his fiduciary duties as MD of the plaintiff-Bank. In the view of the plaintiff-Bank, the 2nd defendant was justifiably dismissed on the strength of the Audit Report commissioned by the Board of the plaintiff-Bank on credit facilities disbursed from July 2009 to 29th June, 2020 (Exhibit D ROA Volume 4 at p. 202) covering the accounts of Nan Enterprise; Antrak Air Ghana; Kwaa Adjei Enterprise; Abusua Restaurant and Edlier Company Ltd. When 2nd defendant was queried to respond to the allegations, he admitted those facts and gave justifications for his act. The plaintiff-Bank relied on authorities such as Awuku Sao v. Ghana Supply Company [2009] SCGLR 710 and Lagudah v. Ghana Commercial Bank [2005-2006] SCGLR 388 as the basis for agreement with the Court of Appeal’s decision. The plaintiff-Bank also submitted that the decision of the 2nd defendant to grant LC facilities to VRA worth a colossal sum of USD $33million and revolving at USD $99 million without Board approval and against the single obligor limit in breach of the Bank’s credit policy is a misconduct. The acts of the 2nd defendant amounted to a serious risk which could have gone bad considering the high integrity needed to run Page 46 of 83 a banking business. The constant breaches of laid down regulations and procedures of the Bank by the 2nd defendant amounted to misconduct and were in breach of his fiduciary duties to his employer. The cases cited were Commission on Human Rights and Administrative Justice v. Ghana Commercial Bank [2001-2002] 1 GLR 531 and Kobea & Others v Tema Oil Refinery [2003-2004] SCGLR 1033. On the Court’s failure to order restitution of the payment of GHC 349,593.33 made to 1st defendant by 2nd defendant on behalf of the plaintiff-Bank, the plaintiff-Bank submitted that it was on account of the Court’s failure to avert its mind to crucial evidence, and that Exhibits tendered (Exhibits 7,11, AF, Z series, 26, 6 and 10) in support of the marketing and due diligence services were not authentic. Further, there was testimony to the effect that the role of the 1st defendant in the transaction was either not known, or the due diligence reports were submitted after the impugned LCs were raised. It is, thus, the contention of the plaintiff-Bank that the failure of the trial High Court and Court of Appeal respectively, to assess these documents and the exact services rendered, were detrimental and affected their decision not to make orders for restitution by the Appellants. Even more so was the fact that the 1st defendant knew, and was expected to have raised questions on the capacity of the Bank to undertake the transaction for which the payment was being claimed. The plaintiff-Bank therefore prayed the Supreme Court to grant all the reliefs endorsed on the Respondent’s Writ of Summons and affirm the dismissal of the 2nd defendant’s counter claim. Page 47 of 83 The 1st defendant appears not to have filed any processes as the record does not show any process or statement of case filed by the 1st defendant. It must, therefore, be assumed that the 1st defendant did not file any processes. SUBMISSIONS OF THE 2ND APPELLANT The 2nd defendant submits that the Court of Appeal having found that the two (2) sets of transactions that is the LC and the overdraft lending transactions with the five (5) other customers of the bank were “voidable” but not “void”, should have gone on to examine the evidence before them as to whether the plaintiff-Bank affirmed or disaffirmed the transaction. This would have made them arrive at the same conclusion as the High Court that the plaintiff-Bank affirmed the transactions by keeping the profits from those irregular transactions. The Court of Appeal would then have arrived at the same conclusion that 2nd defendant and his subordinates were not rogues for their contracts to be terminated. The 2nd defendant submits forcefully that the transactions based on which he was sacked for exceeding the limit of authority in respect of the VRA LC and the five overdrafts, saw the Respondent keeping the profits or interest that was generated. Further, that had the Court followed the judicial precedents applied by the learned trial high court judge in the case of Frederick Bristow v. William Whitmore (1861) GRC 390 and Gregory v. Sparrow [1827] 1M & RYZ, it would not have set aside the decision of the High Court and awarded costs against the 2nd defendant. The 2nd Page 48 of 83 defendant therefore prays for a reversal of the Court of Appeal decision and a restoration of the High Court decision. The 2nd defendant contends further that he was not given a fair hearing to respond to all the allegation made against him. The Court of Appeal’s decision that he was given a fair hearing was not borne out by the evidence on record, making that observation erroneous. The 2nd defendant submits that the conduct of the Head of Audit and the Board in failing to afford him opportunity to defend himself; in ambushing him by keeping from him the fact that the question of his termination was to be on the agenda of the meeting which decided to terminate his employment, only to spring up a surprise by calling on him to defend himself was unfair and in breach of the natural justice principle and same cannot be said to be a reasonable hearing. Therefore, they were in breach of Article 23 of the 1992 Constitution. The 2nd Appellant further contends that the audit report which formed the basis for terminating his employment contract was fundamentally flawed and no proper disciplinary proceedings took place to give him a hearing. He again raises issues with how the Board prejudged the matter before hearing him, and that some of the members of the Board had predetermined agenda even before the meeting was called. It is also the contention of the 2nd defendant that since judicial authorities have a preference for awarding substantial damages rather than reinstating persons unjustifiably dismissed, as cited in Labour Commission v. Crocodile Machete Civil Page 49 of 83 Appeal No. J4/52/2011, he is of the view that the special damages awarded him by the trial High Court were justified. He therefore prays that the decision of the trial judge in dismissing the plaintiff-Bank’s claim and awarding damages and cost in his favour, be restored. Further, that the reversal by the Court of Appeal of these awards was in error and same should be restored by the Supreme Court. The 2nd defendant prays that the decision of the trial judge in dismissing the plaintiff-Bank’s claim and awarding damages and cost in favour of the 2nd defendant be restored. It is the further contention of the 2nd defendant that the Court of Appeal reversal of these awards was in error and same should be restored by the Supreme Court. GROUNDS OF APPEAL “a. The judgment of the Court of Appeal is completely against the weight of evidence; An appeal is by way of re-hearing as established in a long line of authorities such as Tuakwa v Bosom [2001-2002] SCGLR 61 and Djin v Musah Baako [2007-2008] SCGLR 686. Tuakwa v Bosom, supra and other supporting authorities maintain that when the omnibus ground is relied upon, it puts a duty on the appellate court to review and re-evaluate the entire record to ascertain whether the judgment given at trial was supported by the evidence on record. It is, however, the duty of the Page 50 of 83 appellant, as established by authorities such as Djin v Musah Baako supra, to point out or demonstrate to the appellate court, the lapses complained about in the judgement being appealed. It is also trite law that a second appellate court such as the Supreme Court can interfere in two concurrent findings of the lower Court where the lower Courts committed a fundamental error in its findings of fact but the first appellate Court did not detect the error but affirmed it, thereby perpetuating the error, or failed properly to evaluate the evidence, or has drawn wrong conclusions from the evidence presented, or its findings are shown to be perverse. See Gregory v Tandoh [2010] SCGLR 971 at 985-986; Fosua and Adu-Poku v. Dufie (Deceased) & Adu Poku Mensah [2009] SCGLR 310 at 313. In Fynn v. Fynn 2013-2014)1 SCGLR 727, the Supreme Court speaking through Chief Justice Wood (as she then was) held at p.732 that “This court has clearly set out the legal principles governing appeals against the concurrent findings of fact and conclusions of two lower Courts. The principle is that ordinarily, a second appellate Court, such as this honourable Court, would not interfere with the findings of fact made by a trial Court and confirmed on appeal by a first appellate Court. A second appellate Court would overturn such findings and conclusions only in exceptional cases”. Page 51 of 83 In earlier cases such as Obrasiwa II and others v Otu and Another [1996-7] SCGLR 618, the Supreme Court, per Acquah JSC (as he then was) had outlined some of these exceptional circumstances. At p.624 he stated that where it “was established with absolute clearness that some blunder or error resulting in a miscarriage of justice, was apparent in the way in which the lower tribunals had dealt with the facts. It must be established, e.g., that the lower courts had clearly erred in the face of a crucial documentary evidence, or that the principle of evidence had not been properly applied; or that the finding was so based on erroneous proposition of law that if that proposition be corrected, the finding will disappear … It must be demonstrated that the judgments of the courts below were clearly wrong.” However, in Kpakpo Brown v. S Bosomtwi & Co Ltd and Another [2001-2002] SCGLR 876, the Supreme Court observed that where the findings and conclusions are supported by the record and no miscarriage of justice has resulted from the decisions,; the second appellate Court would to confirm those findings and conclusions since the trial court would have had the opportunity to observe witnesses, etc.(See also: Fosua and Adu-Poku v Dufie (Deceased) and Adu- Poku v Mensah [2009] SCGLR 310; Gregory v Tandoh IV & Hanson [2010] SCGLR 971, Obeng & Others v. Assemblies of God Church, Ghana [2010] SCGLR 300 at 409; and Clerk & Ors v. Okai & Ors [2007-08] 1 SCLGR 636. However, that did not relieve the second appellate court of its duty to satisfy itself that the first appellate court like the Page 52 of 83 trial court’s is justified by the evidence on record. See dictum of Acquah JSC (as he then was) in Koglex Ltd (No 2) v Field [2000] SCGLR 175 at p.185. In Obeng v Assemblies of God Church, supra, Dotse JSC enunciated other circumstances under which a second appellate Court’s interference would be justified: “…where findings of fact have been made by a trial Court and concurred with by the first appellate Court, then the second appellate Court like this Court, must be slow in coming to different conclusions unless it was satisfied that there were strong pieces of evidence on record which made it manifestly clear that the findings by the trial court were perverse”. However, in Clerk & Ors v. Okai & Ors, supra, Brobbey JSC speaking on the attitude of appellate courts to interfere with the findings of fact of the courts below said: “It is not the province of the appellate court to interfere with findings of the facts where they are found to be logical and supported by the evidence on record.” Where certain findings of fact are found not to be supported on the evidence, a second appellate court can interfere with the findings. GROUND (B) AND (C ) AND GROUND (2) OF 2ND DEFENDANT’S ADDITIONAL GROUNDS OF APPEAL Page 53 of 83 These grounds are all essentially on whether the 2nd defendant’s right to fair hearing was breached: “The Court of Appeal fell into error in failing to give appropriate weight to the admission by the Chief Internal Auditor that he had not confronted the persons against whom negative audit findings had been made nor obtained their reactions or explanations for forwarding along with his reports (interim and final) to the Board and upon which the Board acted to the detriment of the 2nd Defendant;” c. The Court of Appeal fell into grievous error in concluding that the 2nd Defendant had concluding that the 2nd Defendant had been given a fair hearing given the facts on the record;” Ground (2) of 2nd defendant’s additional grounds of appeal “2. The Court of Appeal erred in its assertion that the trial judge erroneously focused on the explanations given by the Respondent for granting the facilities rather than the breach of the Credit Manual Policy.” Another contentious issue that came up at the trial court and the Court of Appeal was with respect to the issue of fair hearing. Particularly, on natural justice and the effect of breach of the rules of natural justice. The Supreme Court in Lagudah v. Ghana Commercial Bank Ltd [2005-2006] SCGLR 38 speaking through Badoo JSC Page 54 of 83 stressed that an employer has the right to summarily dismiss an employee whose conduct is incompatible with the due or faithful discharge of his duties. At p. 401 he stated thus: “I am not persuaded that, in a commercial setting, in the absence of a contractual provision to the contrary, an employer is bound to comply with the rules of natural justice. At Common Law, it is enough if the facts objectively establish cause for dismissal” On his part, Date-Bah JSC said at p.405, “in the ordinary common law of employment, unaffected by public law considerations, there is no obligation on an employer to set up a tribunal or committee of enquiry before he can dismiss an employee summarily for misconduct. Irrespective of the procedure which he adopts, if he establishes facts justifying the dismissal, that is enough.” What constitutes “Hearing”? The Courts in Ghana and elsewhere seriously frown upon breaches of the audi alteram partem rule to the extent that no matter the merits of the case, its denial is seen as a basic fundamental error which should nullify proceedings made pursuant to the denial. “Hearing” has been defined in Aryee v. State Construction Corporation [1984-86]1 GLR 424 thus: Page 55 of 83 “…if the employee writes back answering the queries and offers an explanation and justification for his conduct or otherwise…. Then surely he would have taken advantage of the opportunity offered and would have been heard”. In Aboagye v. Ghana Commercial Bank [2001-2002] SCGLR 797 at 827 on the content of every query, Justice Adzoe said that “…The precise procedure to be followed in a given situation depends upon the subject matter of the decision or adjudication and upon all the circumstances of the case”. The Court of Appeal in the instant case was of the view that the 2nd defendant was given fair hearing by the plaintiff-Bank and that the rules of natural justice were adhered to before his dismissal. Further, that the query letter served on the 2nd defendant after the audit was enough opportunity afforded the 2nd defendant to give his side of the account. The 2nd defendant, however, believes that he was not afforded adequate opportunity to be heard and or prepare adequately for a hearing. He again contends that an officer of the plaintiff-Bank who was part of the audit indicated that there were limited time constraints to afford him a hearing. In the case of Republic v. High Court, Cape Coast Ex Parte Sey (University of Education, Winneba – Interested Party) [2019-2020] 2 SCLRG 575, the Supreme Court stated that “The rules of court do not require the interested party to exhibit the full proceedings of the investigation committee or disciplinary board. The interested Page 56 of 83 party was therefore right, when it submitted that the Court should apply the ruling in Republic v. Ghana Railway corporation, Ex parte Appiah [1981] GLR 752 where the High Court held that:-‘ The core idea implicit in the natural justice principle of audi alteram partem was simply that a party ought to have reasonable notice of the case he has to meet and ought to be given the opportunity to make his statement in explanation of any question or to answer any arguments put forward against him. The principle does not in my view require that there must be a formal trial of a specific charge akin to formal proceedings’.” Disciplinary procedure in administrative law simply means that a party ought to have reasonable notice of the case he has to meet and ought to be given the opportunity to make his statement in explanation of any question or to answer any arguments put forward against him. Undoubtedly when one applies the decision in Ex parte Sey (supra) there is no doubt the 2nd defendant was given a fair hearing and opportunity to put his side of the story out before the disciplinary decision of the plaintiff-Bank. We are in agreement that the decision of the Court of Appeal was right. Republic v Bank of Ghana Ex-parte: Hoda Holdings Limited Civil Appeal No. J4/62/2023; Judgment Delivered On 26th June, 2024 (Unreported) also confirms the meaning of “fair hearing”. This was an appeal against the decision of the Court of Appeal reversing a decision of the High Court which had exercised its power of judicial review of administrative action. The facts of the case were that, the Bank Of Page 57 of 83 Ghana in pursuance of its regulatory powers over financial institutions, issued a notice on 16th August 2019 declaring Unicredit, a specialized deposit taking institution, insolvent and revoked its licence as a specialized deposit taking institution. It had done so after a period of exchange of correspondence on the issue of the solvency of the Deposit-taking institution. The issue, inter alia was whether it should have given the shareholders and Directors a hearing before issuing the Notice of insolvency and revoking its operating license. Consequently, whether the failure to do so was a breach of the audi alteram partem rule. The Supreme Court held, per Sackey Torkornoo CJ: at paragraph 57 of the judgment that, “The firm position of the law is that to pass the audi alteram partem rule of natural justice in the conduct of administrative or official work, a hearing is accomplished in substance, and not form. In dealing with the principles of natural justice, it must be appreciated that they operate substantively, rather than as procedural safe guards. As long as a party has reasonable notice of the case he has to meet and is given the opportunity to give explanations or answer any arguments set out against the party, the threshold for compliance with the audi alteram partem ruling has been attained, unless a statute or regulation prescribes a specific format for conducting a hearing. See also Republic v Ghana Railway Corporation [1981] GLR 752 cited with approval in Lagudah v Ghana Commercial Bank [2005-2006] SCGLR 388.” GROUND (D) AND (E) Page 58 of 83 d. The Court of Appeal fell into error in finding and concluding that the 2nd Defendant had breached his terms of employment thereby justifying the termination of his employment contract; e. The dismissal of the 2nd Defendant’s counterclaim was wholly unjustified both on the facts and the applicable statutes and judicial precedents; and THE RIGHT TO TERMINATE AN EMPLOYEE’S CONTRACT The terms and conditions of employment of 2nd defendant stated thus: “6.1 thus: The Executive’s engagement may be terminated by the Bank forthwith by notice in writing if: a) The Executive commits any material breach of his obligations hereunder or is guilty of conduct tending to bring himself or the Bank into disrepute b) The Executive is found guilty of any criminal offence other than a minor motoring offence. 6.2 The termination by the bank of the Executive’s engagement (however occasioned) shall be without prejudice to any claim which the Bank may have for damages arising from breach of this Agreement by the Executive.” On the termination of contract of employment and summary dismissal for serious misconduct, Date-Bah JSC in Bani v. Maersk Ghana limited [2011] 2 SCGLR 796 Page 59 of 83 discussed the legal issues applicable in this appeal and also took the opportunity to restate the Ghanaian common law position on the termination of contracts of employment and the extent to which these have been modified by the statutory provisions in the Labour Act 2003 (Act 651). Citing with approval the decision in Lever Brothers Ghana Ltd v Annan (Consolidated) [1989-90] 2 GLR 385 Dr. Date-Bah JSC quoted Osei-Hwere JSC explained, delivering the judgment of the Court of Appeal (at pp.388-9), as follows: “The learned trial judge in our view stated the correct principle of law when he said: ‘The law is that where an employee has, in fact, been guilty of misconduct so grave that it justifies instant dismissal, the employer can rely on that misconduct in defence of any action for wrongful dismissal, even if at the date of the dismissal the misconduct was not known to him: quoting from Boston Deep Sea Fishing & Ice Company v Ansell (1888) 39 Ch. D. 339 at 363, CA’.” Osei-Hwere JSC said that the trial judge all but found the misconduct or dishonesty of the plaintiffs proved. From the principle of law also quoted above which entitles an employer to dismiss summarily an employee he considers guilty of serious misconduct, such as dishonesty, it is evident that the employer is not obliged to set up an investigative process to give the employee a hearing. Similarly, in Gavor v. Bank of Ghana [2013-14] 2 SCGLR 1081 on summary dismissal of employee for gross misconduct, the issue was whether such an employee can complain of fair hearing. The Supreme Court, speaking through Anin Yeboah JSC (as he then was), and relying on the common law principle of an employer reserving the right to dismiss Page 60 of 83 an employee for proven or grave misconduct and a number of other authorities including Halsbury’s Laws of England (3rd ed) at p485 para 938 which states the principle thus: “a servant whose conduct is incompatible with the faithful discharge of his duty to his master may be dismissed…Dismissal is also justified in the case of a servant. … If his conduct has been such that it would be injurious to the master’s business to retain him” The learned Justice continued in affirming what the court says on fair hearing in respect of disciplinary proceedings involving summary dismissals quoted the decision in Awuku-Sao v. Ghana Supply Company Ltd. [2009] SCGLR 710, at p.1091 thus: “’ [I]n the absence of any requirement in the service contract between the Plaintiff and the governing board of the defendant company for the setting up of a disciplinary proceedings, what was essential for determination was whether the plaintiff had been given an opportunity to react to the charges even if not directly to the governing board set up by it, that should satisfy the requirement of natural justice’. …it was not in dispute that the plaintiff was offered an opportunity to explain his involvement in the huge financial loss…this requirement of fair hearing had been satisfied.” Page 61 of 83 BREACH OF FIDUCIARY DUTY AND ULTRA VIRES ACT From the terms and conditions of 2nd defendant’s employment contract, the Bank could terminate the contract of the 2nd defendant if he committed “any material breach of his obligations hereunder or is guilty of conduct tending to bring himself or the Bank into disrepute. When a Managing Director of a financial institution brings the institution to the adverse attention of the regulator, it is clearly a breach of his obligations to his employer. In employer-employee relations there is the expectation of utmost integrity and diligence of an employee in his role and functions in rendering his services. Employment establishments have standard work ethics and norms that guide how their employees are to function. It is from this expectation that disciplinary measures are stated as a consequence of breach of such standards and regulations. In the case of Kobea v. Tema Oil Refinery [2003-2004] 2SCGLR1033 at 1039 the Supreme Court speaking through Seth Twum JSC stated the law thus: “At common law, an employer may dismiss an employee for many reasons such as misconduct, substantial negligence, dishonesty, etc. … These acts may be said to constitute such a breach of duty by the employee as to preclude the further satisfactory continuance of the contract of employment as repudiated by the employee. … There is no fixed rule of law defining the degree of misconduct that would justify dismissal” Page 62 of 83 On whether the nature and frequency of times that an employee commits a misconduct should be considered or not in exacting disciplinary measures after a misconduct, the Supreme Court in CHRAJ v. Ghana Commercial Bank, supra, held that the frequency of the offence or the fact of breaches did not occasion any loss to the employer was irrelevant. The Court speaking through Ansah JA (as he then was) ruled that, “It is not necessary that the petitioner should have been guilty of many breaches of the rules governing his work before the disciplinary action could be taken against him. Since there was cause to discipline him, the isolated instance or ground was enough…. since the dismissal of the petitioner was justified in the circumstances of the case, the Respondent Bank had the power to mete out whatever punishment it thought fit. Moreover, since the harshness of the punishment did not per se make it wrongful, the respondent bank could not be faulted for choosing an option open to it. Accordingly, the respondent bank rightly exercised its discretion in denying the petitioner of his benefits”. In the instant appeal, it was clear from the letter reproduced below, that the 2nd defendant had written or caused to be written a letter to the Regulator dated 12th July 2010 seeking dispensation for exceeding single obligor limit and referring to a previous application in a letter dated 3rd June 2010. Neither of these letters was with the knowledge and authority of the Board. Obviously, neither received a reply, which meant that no dispensation had been given by the regulator. The subject of Page 63 of 83 exceeding limits of single obligor was such a serious matter that it posed an existential threat to the plaintiff-Bank. By 19th August 2010, when the Board wrote to the Regulator, it had still not sighted a response to the letters of June and July, and therefore the dispensation the 2nd defendant was seeking had not been granted, but the transaction had already been executed, putting the Bank in serious breach of its statutory obligations. The 2nd defendant’s conduct had, in disregard of the Board exposed the bank to both bankruptcy and sanctions from the regulator, to an extent that was unreasonable. In fact, he had gone beyond his authority to assume powers that only the Board could exercise, in setting aside the credit policy of the Bank and going beyond the limits of single obligor imposed by statute. It was grave enough for the Board of plaintiff-Bank to dissociate itself from the purported letter by writing the following letter to the Head of Banking Supervision at Bank of Ghana (the Regulator), dated 19th August 2010: (See Exhibit AG ROA p. 421) “Re: Dispensation to exceed lending limit in respect of Financing to Volta River Authority (VRA). As a result of a credit audit mandated by the Board, two letters in respect of the above dated 3rd June 2010 and 12th July 2010 signed on behalf of the Managing Director and by the Managing Director respectively have come to the attention of the Board of Directors. I am directed by the Board of Directors to inform Bank of Ghana and place on record the fact that the Board of Directors did not approve the said request for Page 64 of 83 dispensation. Any request for dispensation should have been done with the approval of the Board of Directors. These letters are an embarrassment to the Board since the Chairperson had informed the Board about the Governor’s concerns about the bank’s exceeding their single obligor limit at a board meeting at which the Managing Director was present. The Board would want to inform Bank of Ghana that it has not sighted Bank of Ghana’s approval for the dispensation requested for. This notwithstanding the board had found out that the LCs currently creating an exposure of Gh¢114.92 million are on the Bank’s books. This creates an exposure of Gh¢101 million above the single obligor limit permissible The credit audit has established extensive breaches of the bank’s credit policy for which appropriate sanctions will be applied. The 2nd defendant going out of his way to act beyond the stated obligor limits with respect to the LC and overdrafts transactions and approval threshold was in clear breach of his fiduciary duties. He did not display an appreciation and understanding of the need to ensure compliance with obligor limits, and therefore treating the whole enterprise as one which justified every risk that produced profit. This mode of doing business was tantamount to playing lottery with the business of the plaintiff- Bank. Indeed, it was providential that the potential for loss did not materialise, for the plaintiff-Bank would have been made bankrupt and put out of business. The Page 65 of 83 nature of the plaintiff-Bank’s work in the instant appeal is hinged on trust and requires that utmost integrity, diligence and candour be observed and the application of good conscience and good judgement to safeguard the interests of the institution. The failure of the 2nd defendant to uphold his fiduciary duty to plaintiff- Bank proved him to be an unfit protector, and certainly constituted misconduct. We agree with the Court of Appeal in upholding the termination. GROUND 3 OF FURTHER GROUNDS OF 2ND DEFENDANT’S APPEAL, AND CROSS APPEAL GROUNDS (A) (B) (C ) “3. The Court of Appeal erred when it failed to realise and hold the Plaintiff Appellant bank having failed with full knowledge to disavow both the VRA LC transaction and the 5 overdraft transactions but kept profits therefrom…” By a notice of cross-appeal the plaintiff-Bank cross-appealed on the following grounds: “a. That the Court of Appeal erred when it refused to order recovery of the Marketing Consultancy Fee paid to the 1st Appellant; b. The Court erred in holding that the 1st Appellant was entitled to assume that the 2nd Appellant had the authority to authorize payment made and Page 66 of 83 c. The Court of Appeal’s failure to order restitution of the payment received by the 1st Defendant is against the weight of the evidence.” Since the above grounds in the Cross-appeal are on the issue of the restitution order, the 2nd defendant’s further ground of appeal (3) will be here dealt with as well. RESTITUTION The plaintiff-Bank prayed for restitution of the payment of GHC 349,593.75(USD 47,500) made to 1st defendant for “marketing consultancy and due diligence services” rendered concerning the LC issued to V. R. A. This demand for restitution from 2nd defendant is in consonance with paragraph 6.2 of the Terms and Conditions supra, of the 2nd defendant’s employment. The 1st defendant denies liability to make restitution. Its defence is based on the rule in Turquand’s case, which, essentially, states that persons contracting or dealing with companies in good faith may assume that acts of its officers have been regularly performed. 1st defendant therefore relies on it to say that being an outsider he could presume regularity of the conduct of an employer’s business by its officials. The said rule has found codification in the Companies Act (Act 992) which offers protection to outsiders dealing with a company and its officers. The presumption of regularity under the evidence Act (NRCD 323) which assumes the regularity of performed official duties are here relied on. The operation of the rule is based upon protection for third parties who deal with officials of a company in good faith. Is the rule in the Turquand’s case Page 67 of 83 applicable in the circumstances of this case? It may be necessary to enquire into the nature of the relationship between 1st defendant and plaintiff-Bank? The parties had a written contract which specified the nature of work to be undertaken and the remuneration in the form of Commission payable. See EXHIBIT A series (RoA p.416). “Consultancy Agreement dated 1st March 2010 … Whereas the Bank requires the services of Abi Capital Limited (The “Marketing Consultant”) to promote its business in the sourcing of business from corporate bodies, including but not limited to Non-Bank Financial Institutions, Insurance Companies, Government and Non-Governmental Organisations, Social Groups and high net-worth individuals… for the Bank.” (emphasis supplied). … “2. Bank’s Duties and Responsibilities “The Bank shall furnish the Marketing Consultant with all relevant information about the bank to enable the Marketing Consultant market effectively the bank’s business.” … Page 68 of 83 “(c) The Bank shall at its own cost provide brochures on the bank, technical literature on products and services available to the Marketing Consultant and prospective clients introduced by the Marketing Consultant.” “4. Terms of the Business … (d)The Marketing Consultant will earn commission based on the business placed with the bank. e) The Marketing Consultant during the execution of the contract shall be paid a commission negotiable based on the [sic] the nature of the business or transaction sourced” …. 11. This agreement constitutes the sole understanding of the parties with respect to the subject matter hereof and the provisions hereof cancel, nullify and supersede any previous agreement between the parties hereto.” This contract was signed by the Managing Director of plaintiff-Bank (2nd defendant) and the Managing Director of 1st defendant and dated 1st March, 2010. From the excerpts of the terms of this agreement above, the 1st defendant was engaged as a ‘Marketing Consultant’ to source business for the plaintiff-bank for a fee in the nature of commissions. Despite the existence of the three-week old written contract above signed by both 1st defendant and 2nd defendant, the Chief Executive Officer of 1st defendant wrote a letter dated 24th March, 2010 to the Managing Director of Page 69 of 83 plaintiff-Bank (ie 2nd defendant) introducing his company thus: (see Exhibit Z1; ROA vol 4 p402) “Dear Sir, Marketing Consultancy – Volta River Authority ABI Capital Limited is a financial and marketing advisory firm and is in the business of raising wholesale deposits, sourcing for trade finance transactions and supporting other financial intermediation opportunities. We have been able to facilitate a trade finance deal with Volta River Authority (VRA) for the procurement of crude oil in an amount of USD 33.0 million. For its facilitation role ABI Capital would charge a brokerage fee of 0.75% per annum on the amount of the letter of credit.” There was no reference to the then three-week-old contract between the two companies. This letter also clearly indicated that this was business the 1st defendant had “found” for the plaintiff-Bank not for a commission as stated in the Marketing Consultancy agreement, but for a brokerage fee of 0.75%. An invoice for $247,500 (with Ghana cedi equivalent of GHS 349,593.75) was presented dated the very day of 24th March 2010 (Exhibit Z2 Vol 4 ROA p.403). The account of 1st defendant was therefore credited with the amount of GHS 349,593.75 and debited to VRA account on 21st April 2010. Despite claims made in the letter of 24th March 2010 that it was 1st Page 70 of 83 defendant who had “found” the business for plaintiff-Bank, Exhibit ‘B’ Z dated 16th March 2010 was an application by VRA for LCs which was to be opened not later than Friday, 19th March 2010. Was this request made pursuant to efforts of the 1st defendant in finding the business? It appears that it was the VRA itself which had written to the plaintiff Bank on 16th March requesting for LCs, for the evidence does not say so clearly. By letter dated February 28, 2011 addressed to the Managing Director of 1st defendant, plaintiff-Bank repudiated the wrongful debit to VRA account stating inter alia, that: “Investigations have since revealed that VRA’s account with the Bank should not have been debited with the said amount, neither was your account to have been credited with the said amount. Upon the instructions of the Board of Directors at its meeting held on Thursday 24th February, 2011 at which all Directors were present, I have been requested to make a formal demand jointly and severally on you and Mr. Peter Illiasu – former Managing Director of this Bank for repayment of the amount of GHS 349,953.75.” The same kind of letter also dated 28th February, 2011 and addressed to 2nd defendant was sent. It stated inter alia: Page 71 of 83 “You will recall that on or around the 21st of April 2010 you authorized the debit of Volta River Authority (VRA) account with GHS 349,593.75 and the same amount was credited to ABI Capital Financial Services Limited account for payment of arrangement fee. This was in respect of Letters of Credit established for VRA without Board authorization. The said debit should not have been charged to VRA’s account without their consent. Furthermore, ABI Capital was not appointed by the Bank since you did not have the requisite authority to enter into any contract with ABI Capital. VRA has therefore made a claim against the Bank for immediate reversal of the transaction on its account. In view of the fact that the debit was wrongful, this Bank has had to repay the said amount in full. … Upon the instructions of the Board of Directors at its meeting held on Thursday 24th February, 2011 at which all Directors were present, I have been requested to make a formal demand on you and the Managing Director of ABI Capital Financial Services Limited, Mr. Baba Abdullah Issah jointly and severally for repayment of the amount of GHS 349,953.75.” The 1st defendant places reliance on the rule in Royal British Bank v Turquand (1856) 6 El &Bl 327, popularly known as the rule in Turquand’s case which was codified under sections 139 to 143 of the repealed Companies Act 1963 (Act 179, specifically section 142 (1) of Act 179, is invoked by the 1st defendant to absolve itself of liability Page 72 of 83 to refund the money paid for services rendered since it had no way of knowing that the plaintiff-Bank’s policy manual prohibits approval of credit facility more than USD $10million; and that the 2nd defendant had acted beyond his powers as the principal of the plaintiff-Bank. He submitted further that the rule was applied in Oxyair Ltd & Darko v. Wood [2005-2006] SCGLR 1057, where it was held that there was no evidence that the appellant therein had actual knowledge that the Managing Director had no authority to enter into a contract to give up shares of the company. Date-Bah JSC stated at p 1070 that “Accordingly, any restrictions on the authority of the managing director contained in the regulations do not affect the validity of the contract entered into by him, unless the plaintiffs’ actual knowledge of such restriction is proved.” The Court of Appeal agreed that the 1st defendant was covered by the rule in Turquand’s case as set down in Act 179, and therefore found no justifiable reason to make restitution orders against the 2nd defendant for the payment made to, and received by 1st defendant. This is a conclusion with which we cannot agree. The situation in Oxyair Ltd & Darko v. Wood supra, is not on all fours with the instant situation as the 1st defendant was not similarly placed as the party in Oxyair Ltd & Darko v. Wood. supra. Here is why: section 142(2) of the repealed Act 179 stated clearly “For purposes of sub-section (1) Page 73 of 83 A person is not entitled to make any of those assumptions if that person had actual knowledge to the contrary or if having regard to the position with or relationship to, the company that person ought to have known the contrary…” The 1st defendant had been told by the 2nd defendant that their net-worth was $40m and that there was business in the region of $33milion and therefore they needed a due diligence report. The record shows that by an undated letter signed by 2nd defendant to Managing Director of 1st defendant, a request was made thus: (see vol 1 ROA p83) “DUE DILIGENCE ON VOLTA RIVER AUTHORITY FINANCING STRUCTURE We refer to our recent contract with your good selves and shall be pleased if you could undertake the following with respect to Volta River Authority. Background We have been approached by the Volta River Authority to establish Letters of Credit to the tune of US$33 Million. Our balance sheet size is circa US$40 million and therefore are constrained by prudential restriction to issue out the LCs. To be able to do this in the past, our Investment Banking Division has issued Guarantees to support the Bank. We Page 74 of 83 intend approaching the Central Bank for dispensation even though we believe our Investment Banking Division will be acting within their rights to issue such a guarantee to support the L/C established. Our key concern however is potential liquidity problems, should the authority be unable to build up adequate cash to liquidate the L/C on maturity. The CEO has recently mentioned substantial arrears due from the Ministry of Finance. In view of the foregoing, we shall be pleased if you can undertake a due diligence on focusing on[sic]: 1. Their sources of repayment: We are advised these include: Receivables from the Ministry of Finance in respect of indebtedness of MD 2. Weekly Receivables from the Electricity Company of Ghana 3. Kindly include in your recommendations the sustainability of this source as a source of repayment. We shall be pleased of you could include in your recommendations what role MBG can play in supporting VRA to improve their liquidity situation. As agreed, your fee for this exercise shall be 0.75% of the amount of the transaction. Page 75 of 83 We look forward to receiving your recommendations on how we can support this key strategic institution going forward. Signed. Although this very important letter commissioning the due diligence report was undated, it is possible to estimate when it was written since the 1st defendant acknowledged receipt of the request, by letter dated 14th February, 2010. Presumably then, the request letter was written before that date of 14th February 2010. Having been told the link between the net-worth and the proposed business, the 1st defendant had the requisite information, and alarm bells should have sounded in any financial consultant’s head. Therefore, he could not be said not to have known that what he was being asked to advise on, was contrary to statute. If 1st defendant could advise that the VRA Board ought to be involved in such a transaction in the Due Diligence Report, then it is untenable for such an expert to say he did not, in good faith, know there were limits to the power of the Managing Director of plaintiff-Bank, or indeed not to advise the involvement of plaintiff-Bank’s Board. Again, it is not the validity of the Marketing Consultancy Agreement (Exhibit AF) that is in issue. This was entered into on 1st March, 2010, and by the appropriate parties. Ordinarily, it ought to be binding on both parties. However, also on the record is the letter from the VRA dated 16th March 2010 communicating a resolution of the Board on 15th March 2010, and authorizing the financing transaction with plaintiff-Bank. Therefore, had the sequence of events borne out that the project was Page 76 of 83 born of the Marketing Consultancy Agreement, there would have been no issues with validity of the engagement. However, the supposed due diligence report of February 2010, predated both the request for financing by VRA and also the consultancy contract entered into by the parties on which the Report is hinged. Therefore, the due diligence report could not have been performed under the Marketing Consultancy contract since it predated the said contract. It follows that if the report was not so contracted, then the legal validity of the consultancy contract notwithstanding, the activities that predated it would not be deemed to have been undertaken under its cover. That being the case, if by reason of the chronology of events, the plaintiff-Bank contends that the due diligence report was a “sham” or “afterthought”, it would be hard to dispute that conclusion on the available facts. It is also the case that the letter of request for the Due Diligence report had such detailed instructions on what the content was to be, that if the plaintiff-Bank contended that it was “unnecessary”, one could appreciate why. With all the information that the 2nd defendant conveyed to the 1st defendant, what was there to put into an objective report? Again, the very nature of the service rendered was unclear. Was it a due diligence report or a brokerage report or a marketing consultancy report? Contrary to what the trial High Court and the Court of Appeal accepted, the differences between those services were material, and not at all insignificant. Indeed, if they were insignificant, then why did the 2nd defendant not authorize payment from the plaintiff-Bank’s own resources since it was a product the Bank was buying from 1st defendant? Why Page 77 of 83 were the accounts of VRA debited instead, when they had not commissioned or authorized (i.e., bought any product from 1st defendant) by the service rendered by 1st defendant? Therefore, in respect of the nature of the services rendered, the testimony of the defendant that due diligence and consulting services/marketing/brokerage services are the same is untenable. Even if the chronology of events supported the notion of insignificant difference, (and it does not) the Marketing Consultancy Agreement, could not properly be said to cover all manner of activities in the nature of brokerage and other services. It therefore does not lie in the mouth of 2nd defendant to insist that there were no significant differences in the services rendered, and that they could be characterized any which way. Again, the 2nd defendant, by claiming that the 1st defendant had rendered services under the Marketing Consultancy in the nature of due diligence report, raises other difficulties. Is it to say, then, that the very company that claimed to have “found” the business for the plaintiff-Bank was also contracted to prepare a due diligence report on that same company? Was there not a conflict of interest situation created when a company that stood to earn a large fee from a transaction it had “found” for plaintiff- bank, was also the very same consultant commissioned to produce a ‘due diligence report’ on that company? It is therefore no surprise that the Due diligence report having stated in para 5.4 (see Vol 1 ROA p.97-99) “Facility risk structure Page 78 of 83 ,,, consequently facilities are largely insecured thus inuring substantial credit risks… Alternative consideration It is recommended that the bank focuses attention on potential crystallization of the L/C since it is unclear if full cash cover will be available at maturity of the L/C. Given that the L/C would typically exceed your single obligor, other sources would be explored.” After such a stark assessment of the problem of liquidity for plaintiff-bank if the risk materialsed, the 1st defendant then went on to rate the overall assessment risk based on the study as “moderate and acceptable.” How could such a rating be supported in the absence of a conflict of interest? Of course, one cannot lose sight of the fact that the claim of having “found” the business was spurious. In either situation, serious issues of breach of business ethics could arise for both defendants. In any case, one might ask, at what point did this Marketing Consultant transform itself, outside the bounds of the written contract, into “a financial and marketing advisory firm and [which] is in the business of raising wholesale deposits, sourcing for trade finance transactions and supporting other financial intermediation opportunities”? Ordinarily, it would have been safe to presume that the 1st defendant, being a service provider should not suffer the lapses and indiscretion of Page 79 of 83 officers of their clientele. However, such a posture here would not be appropriate, for how could the 1st defendant, a supposed expert in the financial industry claim in good faith, not to have known that the 2nd defendant had no authority to exceed the single obligor limit when the 2nd defendant’s letter stated this explicitly from the outset? It is also clear on the evidence that the preparation of the report was not a legitimate transaction cost of the VRA loan, and therefore, the billing of VRA for it was improper. It is possible to conclude from the chronology of events that, far from it being an act of malice on the part of the chairperson of the Board of plaintiff-Bank as detailed in paragraphs 17-19 of the 2nd defendant’s statement of case, the reversal of the payments and the refund of the amount to VRA by the plaintiff-Bank was the act of a responsible bank towards a client with which it had a long-standing relationship. Thus, we respectfully disagree with the Court of Appeal’s decision “to uphold the Court’s ruling as the reasons assigned are sound in law and supported the evidence on record.”. It is appropriate, in the circumstances, to order restitution in favour of the plaintiff-Bank. VOIDABLE CONTRACT The 2nd defendant submitted that though he breached the policy manual of the plaintiff-Bank in entering into the transaction with VRA without the necessary Page 80 of 83 approvals, it brought in a profit of 14 million old cedis (140,000 Ghana cedis) to the Respondent. The 2nd defendant contends that the plaintiff-Bank terminating his appointment while enjoying the profit from the unauthorized transaction amounted to the plaintiff-Bank unjustly enriching itself by the fruits of his impugned ultra vires action. It was on the basis of this contention that the 2nd defendant asked for restitution and damages from the Court of Appeal. It is our view that the conduct of the 2nd defendant was not only unacceptable, but also untenable as being in total violation of the plaintiff-Bank’s practice and procedure. It was an unacceptable risk that the 2nd defendant exposed the plaintiff-Bank to, in engaging in that impugned transaction. It was clear from the other accounts which benefited from the largesse of the 2nd defendant, that he had scant respect for the principles laid down in the Credit Manual. The transactions could have had serious repercussions on, and possibly led to the collapse of the plaintiff-Bank’s business. The prohibition was against the risk being taken and not the possible profit that the risk could yield. On this point, we agree with the Court of Appeal’s decision in not granting the prayer of the 2nd defendant. GROUND (F) “f. The damages awarded against the 2nd Defendant be set aside in its entirety.” Further grounds of appeal were filed by the 2nd defendant after seeking leave on 30th November,2023. Page 81 of 83 “1. The court of appeal erred in reversing the damages awarded to the 2nd Defendant; “ DAMAGES The courts are guided by several principles in awarding damages and compensation to parties whose rights have been violated or who have suffered unfairly due to breaches in their contractual relations. In Bonsu v Agyemang (2012) 2 SCGLR 978 their Lordships held that the nature of damages to be accorded depends on the quantum of breach and how the injured party would be put in the same situation had the breach not occurred. The facts, the evidence and the law having been applied in this instant case, the dismissal of the 2nd defendant plaintiff-Bank was lawfully carried out, and was not in breach of any constitutional or statutory provision (Labour Act 651). The plaintiff- Bank acted within its rights and duties as an employer to use internal procedure to discipline the 2nd defendant for not obeying lawful organizational instructions. His acts could only be described as a misconduct which was so serious that it justified the termination of his contract. Page 82 of 83 In the circumstance, no breach of contract has been occasioned and the dismissal was lawful. Damages ought not to be awarded to the 2nd defendant, and the Court of Appeal was right in refusing such grant. The appeal stands dismissed. The cross-appeal is upheld. (SGD.)PROF. H. J. A. N. MENSA-BONSU (MRS.) (JUSTICE OF THE SUPREME COURT) COUNSEL DANIYAL ABDUL – KARIM ESQ. FOR PLAINTIFF / APPELLANT / RESPONDENT / CROSS APPELLANT DICK K. ANYADI ESQ. FOR 2ND DEFENDANT / RESPONDENT / APPELLANT / CROSS RESPONDENT WITH ALBERT DUOSE ESQ. Page 83 of 83