Justice Y. Abdulai V Ecobank Ghana Limited Writ No. H1/229/2020 Judgment Delivered On 9th March 2023.

04 Jun Justice Y. Abdulai V Ecobank Ghana Limited Writ No. H1/229/2020 Judgment Delivered On 9th March 2023.

“At this point, it is trite knowledge that among the most important conditions in the contract between a banker and a customer who conducts a current account is the obligation of the banker to honour the customer’s cheques to the extent of the customer’s credit… If for any reason, this is not stated expressly in a contract between a bank and a customer, it is as a matter of necessity, implied by law.”

Justice Y. Abdulai, the Plaintiff/Appellant (hereinafter called “the Appellant”), a legal practitioner and head of a law firm brought an action against Ecobank Ghana Limited, the Defendant/Respondent (hereinafter called “the Respondent”), a bank, for wrongfully dishonouring a cheque issued to Trade and Save Limited (“the Payee”). The Appellant sued the Respondent for defamation, and breach of contract, and sought punitive damages, among other reliefs. The Respondent denied the allegations, attributing the dishonoured cheque to a mistake made by the United Bank for Africa (UBA), the Payee’s bank for entering the wrong Magnetic Ink Character Recognition (MICR) details. The High Court ruled in favour of the Respondent, prompting the Appellant to appeal the decision of the High Court.

The Appellant, in his Notice of Appeal, outlined several grounds for the appeal, including contentions that the judgment was against the weight of evidence, that the Honourable Court erred in law and on the face of the admissions regarding defamation, that there was a breach of contract in the banker-customer relationship, and that the court erred in placing the blame on United Bank for Africa (UBA), the Payee’s bank when it was not a party to the suit.

In the appeal, the Appellant put forth several compelling arguments for consideration:

1. That the trial court judge’s interpretation of defamation was generic, failing to consider the technical legal aspects. This, according to the Appellant, led to an erroneous conclusion. Referring to E.P. Ellinger et al.’s work on modern banking law, the Appellant argued that defamation could arise from a wrongfully dishonoured cheque due to supposed fund inadequacy, impacting the customer’s reputation. The Appellant cited cases to support this argument and criticized the Respondent’s reliance on the Cheque Codeline Clearing (CCC) Guideline to dishonour the cheque as improper.
2. That the court erred in finding no breach of contract when the Respondent dishonoured a valid cheque. The Appellant argued that the dishonoured cheque violated relevant sections of the Bills of Exchange Act, 1961 (Act 55) as it met the criteria of both a valid cheque and a valid bill of exchange.
3. That the United Bank of Africa (UBA), blamed for the cheque error, should have been joined as a party to the suit for vicarious liability.
4. That the trial judge wrongly attributed blame to UBA, a non-party. The Appellant believed that the issues could have been resolved directly between the Appellant and the Respondent without involving UBA, emphasizing the breach of contract resulting from the dishonoured cheque.

The Respondent argued all grounds of the appeal collectively. It contended that a rehearing would lead to a conclusion similar to that of the trial court, favouring the Respondent’s case. The Respondent clarified that another cheque issued by the Appellant, later in time, lacked sufficient funds, a fact undisputed during the trial. The Respondent further claimed that the Appellant’s story lacked evidence and that the dishonouring of the cheque had a legal basis per the Cheque Codeline Clearing (CCC) Guidelines.

On the issue of defamation, the Respondent stated that its actions were within regulatory guidelines, thus negating any claims of defamation or breach of the banker-customer relationship. Citing the Supreme Court case of  Owusu-Domena v. Amoah [2015-2016] 1 SCGLR 790, the Respondent raised the qualified privilege as a defence, arguing that malice was not proven. The Respondent explained that statements made in the performance of its legal duties, such as ensuring compliance with banking regulations, are protected by qualified privilege. The Respondent urged the court to dismiss the appeal entirely.

The Court of Appeal reiterated the elements of defamation when it held that for a party to succeed in an action for defamation, the following specific elements must be proven;

1. That there was a publication made by the Defendant;
2. That the publication was made about the Plaintiff;
3. That the publication must have been capable of being defamatory in the ordinary sense or is defamatory given the surrounding circumstances;
4. That the publication was made with intent to damage the reputation of the Plaintiff or with malice;
5. The Defendant does not plead qualified privilege or fair comment as a defence, and;
6. That there was actual damage to the reputation of the Plaintiff.

While the first three elements were not disputed, the elements of malice and qualified privilege were debated. The court concluded that the defence of qualified privilege applied, as the Respondent’s actions were in line with its duty as regulated by the Bank of Ghana, and there was no evidence of malice. The claim of defamation was therefore dismissed.

Notwithstanding the dismissal of the defamation claim, the court recognized that there was a fundamental obligation in the contract for the bank to honour the cheque issued by the customer, provided there were sufficient funds. As the Respondent failed to honour the cheque despite adequate funds, it breached the contract.

Consequently, the appeal succeeded in part, and nominal damages of GH¢20,000.00 were awarded to the Appellant for the breach of contract.

Insight: The most important obligation of a bank in a contract between a bank and a customer who conducts a current account is the obligation of the bank to honour the customer’s cheques to the extent of the customer’s credit. If for any reason, this is not stated expressly in a contract between a bank and a customer, it is as a matter of necessity, implied by law. This interest of the client must however be balanced against the ability of a bank to efficiently and effectively process cheques submitted by customers as a matter of general convenience and welfare of society.

This publication may provide a summary of legal issues but is not intended to give specific legal advice. If you require legal advice, please speak to a qualified lawyer, which may include a qualified member of our legal team at B&P ASSOCIATES (info@bpaghana.com).

AUTHOR:      ERNEST KOFI BOATENG (2023 Trainee Legal Associate)