Ofori Vrs Ecobank Ghana Ltd and Others [2018] GHASC 49 (25 July 2018)

Key Facts

Transaction Type

Issues

• The court found the lower court failed to assess critical evidence, such as the register entry and the Exchange's role, leading to an incorrect decision.
• The court examined if BOG's request to suspend the trade led to its failure. It determined the trade had settled before the suspension, rendering the intervention ineffective to nullify the transaction.
• The court found the Exchange's rules should be interpreted as a whole, rejecting the lower courts' narrow reading and emphasizing Rules 50(2) and 52.
• The court analyzed whether BOG's suspension of the trade frustrated the contract. It found the 2nd defendant's obligations were fulfilled post-settlement, making frustration inapplicable.
• The court clarified that under Ghana's rules, DVP is sequential: shares are registered in the buyer's name by T+1, and payment occurs by T+3. The trade was valid once both steps were completed.
• The court reviewed the T+3 deadline, determining payment after 11am was permissible under Rule 52, which allows three additional days for settlement.
• The court evaluated if the plaintiff owned all shares sold to the 2nd defendant. It concluded that the shares were validly transferred via register entry, and the nemo dat principle did not apply as the buyer's ownership was legally established.
• The Supreme Court noted the plaintiff did not need to challenge BOG's discretion since the trade's validity was already settled, making this ground moot.

Holdings

• The trade in 14,130,000 shares of Cal Bank Ltd was settled in accordance with the Ghana Stock Exchange's rules before the suspension. Delivery versus Payment (DVP) was achieved as the shares were registered in the buyer's name and payment was made via direct remittance.
• The appeal succeeds, and the plaintiff is awarded nominal damages of GHS100,000 against the 1st defendant for breach of contract, with specific reliefs granted for share registration and payment enforcement.
• Ownership of shares transferred to the 2nd defendant upon registration in the company's register, as per sections 30, 36, and 98 of Act 179. The trial court's dismissal of the plaintiff's claim was overturned.
• The 4th defendant's (SEC) directive to reverse the share transfer was nullified as it lacked legal or factual basis. The Exchange's rules and Ghana law confirm the validity of the transaction.
• The 1st defendant (bank) is liable to pay the plaintiff GHS13,762,240.00, including interest at agreed and bank rates, for breach of the banker/customer relationship by withholding funds.

Remedies

• The court grants a declaration that the 14,130,000 shares of Cal Bank Ltd are the property of the 2nd defendant as per the judgment.
• The 1st defendant is directed to pay GHS13,762,240.00 to the plaintiff, including GHS7,200,000.00 bankers draft to Zenith Bank, GHS400,000.00 to SG-SSB Bank, and GHS6,162,240.00 from the fixed deposit.
• The plaintiff is awarded interest on GHS6,160,240.00 at 30% per annum from 2nd June 2008 until the High Court judgment date, and at the prevailing bank rate thereafter until final payment.
• The plaintiff is awarded nominal damages of GHS100,000.00 against the 1st defendant for breach of the banker/customer contract.
• An order is issued to enter the 2nd defendant's name in the register of shareholders of CAL Bank Ltd as the legal holder of the shares in question.
• The plaintiff is awarded interest on GHS7,600,000.00 at the prevailing bank rate as of the High Court judgment date, calculated from 2nd June 2008 until final payment.
• A declaration is issued that the 4th defendant's (Securities and Exchange Commission) ruling declaring the trade not 'consummated' is null and void.

Contract Value

Monetary Damages

Legal Principles

• The Supreme Court affirmed its authority to review the Exchange's interpretation of its rules, emphasizing that even regulatory bodies' decisions are subject to judicial scrutiny. The court also rejected the lower courts' reliance on the doctrine of frustration, holding that it only applies to future obligations, not those already performed.
• The court used the purposive approach to interpret the Trading and Settlement Rules of the Ghana Stock Exchange, prioritizing the rules' intended purpose over a rigid literal reading. This included considering Rule 50(2) and Rule 52, which allow for closing out failed trades within three additional days, rather than treating the 11 a.m. T+3 deadline as an absolute bar.
• The court explicitly rejected the defendants' argument that the trade was frustrated by the Bank of Ghana's suspension, stating that frustration only relieves parties from future obligations. Since the trade had already settled (shares transferred, payment made) before the suspension, the doctrine was inapplicable.

Precedent Name

• Gregory V Tandoh
• Luguterah v Northern Engineering Co. Ltd
• Hanna Assi (No.2) v Gihoc Refrigeration & Household Products Ltd (No.2)
• Barclays Bank v Sakari
• Abu Ramadan & Nimako v EC & A-G
• Re Lehman Brothers International (Europe) (No 2)
• Lee v Showmen's Guild of Great Britain
• British Actors' Equity Association v Goring & Ors
• Adehyeman Gardens Ltd v Assibey
• Tema Oil Refinery v African Automobile

Key Disputed Contract Clauses

• The court analyzed Rule 46(1) of the Exchange's Trading and Settlement Rules, which mandates clearing and settlement by 11am on the third business day (T+3). Defendants argued this deadline was violated, but the court found Rule 52 allows three additional days for closing out trades.
• Rule 52 was pivotal in determining that trades not settled by 11am on T+3 could still be closed out within three additional days. The court rejected the lower courts' narrow interpretation, affirming the plaintiff's right to enforce payment under this provision.
• The court examined Rule 69, which defines delivery as including 'movement of transfer documents' or 'any other mode as determined by law.' It concluded that registration in the company's register (not physical certificate delivery) satisfied DVP under Ghana's sequential system.

Cited Statute

• Companies Act, 1963 (Act 179)
• Sale of Goods Act, 1962 (Act 127)
• Courts Act, 1993 (Act 459)

Judge Name

• BAFFOE-BONNIE, JSC
• YEBOAH, JSC
• APPAU, JSC
• DOTSE, JSC
• PWAMANG, JSC

Passage Text

• Rule 50(2) makes reference to rule 52 and under that rule a trade that is not settled by 11am of day T+3 may still be settled within three additional days so the payment effected after 11am on 30/5/2008 in this case did not offend the rules of the Exchange.
• In our considered opinion, the defences of the defendants melt away in the face of a true and proper construction and application of the rules of the Exchange as a whole and the relevant law to the facts of the case.
• The combined effect of sections 30 (2) & (5), 36, 98(2) of Act 179 and the decisions referred to above is that ownership of shares is determined by the entries in the register of members so when shares have been transferred the title of the buyer to the shares is vested from the time the purchaser's name is entered in the register of members.

Damages / Relief Type

• Order for GHS13,762,240.00 payment (including GHS7,200,000.00 bankers draft to Zenith Bank, GHS400,000.00 to SG-SSB Bank, and GHS6,162,240.00 fixed deposit)
• Order to register the 2nd Defendant as shareholder
• GHS100,000.00 nominal damages against 1st defendant for breach of contract
• Interest on GHS6,160,240.00 at 30% per annum from 2nd June 2008 until High Court judgment, and at bank rate thereafter
• Declaration that the shares are the property of the 2nd Defendant
• Interest on GHS7,600,000.00 at prevailing bank rate from 2nd June 2008 to final payment
• Declaration that the 4th defendant's ruling reversing the share transfer is null and void