Tuesday, December 16, 2014

Stanchart suffers $14 million penalty


 Standard Chartered Bank Ghana Limited (Stanchart) suffered a heavy legal blow yesterday when the Fast Track High Court ordered it to pay $14 million to a businessman for wrongfully refusing to honour cheques issued by him.
The bank was also slapped with GH¢30,000 cost, and further directed to pay the amount with interest, with effect from August 2012 to the day of final payment.
Mr Akwasi Boakye Osei, the plaintiff in the case, had prayed the court to award a total of $18.7 billion in special and general damages but the court, after considering the evidence adduced in the case, settled on $14 million.
The court, presided over by Mr Justice K. A. Ofori-Atta, held that the plaintiff and his witnesses had led ample evidence to warrant the grant of his claims.
It, however, held that the plaintiff failed to lead specific evidence on why special damages of $2.1 billion should be awarded to him and, accordingly, refused to grant it.

Case of plaintiff
Mr Osei, a customer of Standard Chartered Bank brought the action against the bank, in May 2014 after the bank failed to honour five cheques he had issued to two churches, the Accra Metropolitan Assembly (AMA), the Internal Revenue Service (IRS) and an outdoor advertising company.
His beef was that the bank had caused him embarrassment, huge financial losses, the potential to face court action from revenue agencies and the threat to lose his property following threats from the Accra Metropolitan Assembly (AMA) to auction his property on the Oxford Street, Osu to defray his indebtedness to the assembly.
The plaintiff said he had at all material times had enough funds in his accounts but the bank kept dishonouring his cheques despite giving the green light to the bank to honour the cheques.
“Defendants consistently refused to honour plaintiff’s cheques when at all material times the plaintiff’s account with the defendant’s at Osu Branch, Accra was on credit and defendant had sought for and plaintiff had confirmed that payments be made,” the plaintiff had argued.

Particulars of loss and damages
Listing the particulars of loss and damages as a result of the bank’s inaction, Mr Osei said, among other things, that he had lost business with DDP Outdoors Ltd to the tune of $2 million; $15 million loss of business prospects in Adwoa Adjeiwaa building; $1 million loss of image to two churches and loss of $45 million revenue due to the refusal of tenants at Adwoa Adjeiwaa building to renew their tenancy.
According to the plaintiff, the bank had caused him to lose the prospect of raising funds to undertake a multi-million project similar to the Adwoa Adjeiwaa building project.
He said due to the bank’s failure to honour a February 13, 2012 cheque he had issued to the then IRS, the IRS had withdrawn a five per cent withholding tax granted to one of his properties.
“By reason of the matters aforesaid, plaintiff has been injured in his businesses and has been put into considerable trouble, inconvenience, expense and has suffered loss and damage,” the plaintiff averred in his amended statement of claim.

In its statement of defence, the bank denied the plaintiff’s claims and said it acted in accordance with best banking practices to protect the plaintiff from fraudsters.
According to the bank, it could not reach the plaintiff to confirm whether or not payment should be made to some payees while at some material times, he did not have enough funds to match the face value of some of his cheques.
“The defendant further avers that the plaintiff’s alleged loss of image with the two churches and the projection of future loss as unilaterally determined by the plaintiff for 15 years relating to the Adwoa Adjeiwaa Building and Tema Warehouse are not only fanciful but also ludicrous and unreasonable as they are totally unrelated to the plaintiff’s banking transactions with the defendant.
Describing the plaintiff’s claims as ridiculous, the bank averred that “the plaintiff is wrongly allocating blame for his personal problems which have as now assumed corporate gab,” adding that “the plaintiff is not entitled to his mandatory claim or any at all”.

Decision of court
But in a two-hour-long judgement, the court expressed the view that the plaintiff was entitled to some of his claims and submitted that the bank’s decision to write “account dormant” on the plaintiff’s cheque to the IRS exposed the plaintiff to criminal prosecution from the IRS and also risked being blacklisted in the banking industry for up to three years.
The court held that the bank had subjected Mr Osei to ridicule and humiliation by its refusal to honour the plaintiff’s cheques a number of times.
It also accepted Mr Osei’s explanation that his account at the bank was not dormant as was being alleged by the defendant.
Mr Justice Ofori-Atta said there was no basis for the bank to dishonour the plaintiff’s cheques and accordingly entered judgement against the bank.
The parties called 10 witnesses each.

Counsel for the plaintiff, Mr J. K. Agyemang, pleaded with the court to award $1.4 million cost against the bank but counsel for the bank, Mr Samuel Atta Akyea, opposed the request.
Mr Akyea argued that the value of the five cheques which were dishonoured by the bank did not total $100,000 and also reminded the court that “you said no direct special damages. You have only awarded general damages,” and urged the court to allow the parties to bear their own costs.
Mr Agyemang did not take kindly to Mr Akyea’s statement and said “the plaintiff succeeded and is entitled to cost”.
He described the bank’s action as irresponsible and said it was surprising the lawyer now had the “audacity to say we are not entitled to cost”.
He advised the the defendant’s counsel to plead for a reduction and “not to say we are not entitled to cost”.
The court eventually awarded GH¢30,000 cost in favour of Mr Osei.

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