Butt Vrs Barclays Bank of Ghana Ltd (H1/124/2006) [2008] GHACA 24 (28 May 2008);




Coram:    Akamba, J.A. [ Presiding]

   Marful Sau,  J.A.

                                                                  Yaw Appau, J.A.


May 28, 2008.

RICHARD BUTT                                          PLAINTIFF/APPELLANT






AKAMBA, J.A: This case has very close links with the Supreme Court decision in Richard Butt vs. Chapel Hill Properties and Devi Charity Butt, Civil Appeal No CA 3/2003 of 21st July 2004 and reported at page 636 of the (2003-2004) Supreme Court of Ghana Law Reports. Apart from the present defendant/respondent (simply respondent) not being a party in the earlier proceedings, the facts and persons involved in this suit are but the same as those in that decision.  It is also evident that the matters which were the subject matter of the Supreme Court decision as in the present matter took place between 1994 and 1996 hence the findings of fact are binding on this court.

The Plaintiff/Appellant (simply Appellant), a British national was married to Devi Charity Butt, a Ghanaian. Whilst the marriage subsisted the Appellant and his wife became managers of Chapel Hill Properties Ltd (simply the company) in Takoradi. The company operated an account with its (respondent’s) Takoradi High Street branch through which various transactions were conducted. The company’s sole shareholder was Mrs. Devi Charity Butt. The bank mandate form is a form by which a company issues instructions for operating its bank accounts. The company submitted a completed bank opening mandate form on 11th April 1994 to guide its operations and instructions in respect of its account with the respondent. Under the mandate the respondent was obliged to honour all instructions if signed by the plaintiff and the wife Devi Charity Butt.

  On 12 October 1995 the Appellant and Mrs. Butt in apparent consonance with the opening mandate furnished the respondent with written instructions to the effect that appellant was traveling out of the country and thereby authorizing the wife Mrs. Devi Charity Butt to be the sole signatory and to transact business on the company’s account until the appellant’s return. When the appellant returned from his travel he alone on 13th November 1995 wrote to the respondent instructing them to revert to the previous account opening mandate. The respondent’s officials refused to comply with the appellant’s sole instruction viewing it as being contrary to the mandate held by the respondent and therefore requested appellant to strictly comply with the mandate. On or about 13th November 1995 Mrs. Butt also notified the respondent bank that no instructions in respect of the operations of the company’s bank account should be honoured unless it was countersigned by her in accordance with the mandate held by the respondent. The trial court on 17th November 2005 found that the respondent acted properly in refusing to act upon the sole instruction of the appellant and to have requested for a fresh mandate upon becoming aware of some dispute regarding the running of the account. It is evident from the record that in response to a request by the respondent, the Secretary of  Chapel Hill Properties Ltd submitted a new mandate which excluded the appellant as a signatory to the account.

The court in dismissing the action also concluded that the appellant had failed to prove the ingredients of the claim based on negligence, that is to say, that there was a duty of care owed to the appellant by the respondent, which duty was breached by the respondent, resulting in loss or damages to the appellant.

The appellant filed the following grounds of appeal for determination by this court:

(1) The Fast Track High Court erred when it held that a resolution was passed by the company Chapel Hill Properties Limited to remove the plaintiff from the mandate upon which resolution the defendant acted when no evidence of such resolution was produced.

(2) The court erred when it held that the defendant did not owe the plaintiff a duty of care when defendant granted the plaintiff a personal loan of thirty million cedis for the purpose to (sic) enable the plaintiff pay the difference between one hundred and twenty pounds that had been transferred from Barclays Bank Islington to Barclays Bank Ghana Limited to pay of (sic) the bridging loan and also for plaintiff to meet preliminary expenses such as architectural fees and other incidental expenses in respect of the proposed hotel for Chapel Hill Properties Ghana Limited which plaintiff was made to believe by the defendant that all expenses made by the plaintiff in respect of Chapel Hill Properties Limited would be treated as plaint iff equity contribution.

(3) The court erred when it held that exhibit F a letter written by the plaintiff  and his wife that plaintiff was traveling to Europe and in his absence his former wife would be the sole signatory of the company‘s account was capable of changing the original mandate.

(4) Further grounds may be filed upon receipt of the record of Appeal.”

The appellant later filed the following additional grounds for determination:

 1 The court erred when it held that the defendant’s duty of care in respect of Chapel Hill Properties (Ghana) Limited was owed to Chapel Hill Properties (Ghana) Limited and not to the plaintiff personally and that in any case the defendants bank did not breach any duty of care.

2. The court erred when it held that the plaintiff was unable to prove that he suffered any damages.

3. The court erred when it relied on the Supreme Court decision Richard Butt v. Chapel Hill Properties (Ghana) Limited and another to deal with matters that occurred long before the decision.

4. The court erred when it held that the defendants acted prudently by acting upon a new mandate which removed the plaintiff as signatory to the cheques of Chapel Hill Properties limited.

I will begin with the original ground three (3) together with the additional ground four (4) since they both appear to have triggered the whole dispute. Exhibit B at page 497 of the appeal record is the opening bank mandate. In that document the parties indicated that Barclays Bank Ltd (the respondent) was mandated to deal in the finances of Chapel Hill Properties Ltd (the company). The signatories to the account were provided. The two stated nominees are Richard Butt (Chairman) and Mrs. Devi Butt (Director) together with their specimen signatures. Clause 5 of the mandate is very significant. It states: “That the foregoing mandate and list of names remain in force until receipt by the said Bank of a duly certified copy of a resolution rescinding or amending the same. We hereby certify the above to be a true copy from the Minutes.” In his book entitled, The Practice and Law of Banking by H.P.Sheldon (9th edition, Revised) the following useful guide is stated at page 291 about the importance of the mandate for the operation of the account:

“This mandate duly signed by the chairman and countersigned by the secretary forms the banker‘s authority for transacting business with the company, and this authority, provided it is consonant with the provisions of the Memorandum and Articles, will hold good even though as a matter of fact the resolution may have assigned powers to persons not properly appointed for such functions.”

Our Companies Code (Act 179) recognizes two types of resolutions by which decisions of a company may be adopted or passed. In the instant appeal even though it is not specified what type of resolution is the preferred one for the purpose of changing the bank opening mandate it is important to observe that under section 168 of the Companies Act, 1963 (Act 179) two common types of resolutions are recognized, notably special resolutions and ordinary resolutions. A special resolution which is termed extraordinary resolution in certain jurisdictions is one that has been passed by not less than three-fourths of the votes cast by the members of the company who being entitled so to do, vote in person or, where proxies are allowed, by proxy, at a general meeting of which, notice specifying the intention to propose the resolution as a special resolution, has been duly given. A resolution is ordinary when it is passed by a simple majority of votes cast by the members of the company who, being entitled so to do, vote in person or, where proxies are allowed, by proxy at a general meeting.

What then was the significance if any, of the letter of 12th October 1995 (exhibit F) signed by both Richard John Butt (Chairman) and Devi Charity Butt (Director) and addressed to the Manager of Barclays Bank Takoradi, the respondents? The trial court held the view that the letter signed by both plaintiff as Chairman and Devi Charity Butt as Director was ‘clearly in consonance with the mandate - Exhibit B.  That position is not borne by the record before this court for the following reasons. The authors of exhibit F deluded themselves into believing that they were effecting a change in the mandate to authorize Mrs Devi Charity Butt to be the sole signatory whilst Appellant was on business tour. Exhibit F failed to achieve this objective because it was not a duly certified copy of either a special or ordinary resolution amending the mandate as envisaged under section 168 of Act 179. It is important to underscore the fact that this requirement is not an issue of mere form as much as what informs the issuance of the document in question. The Companies (Code) Act requires that certain steps be taken before a meeting of members of a company can be held for the purposes of passing either a special or ordinary resolution. This was not the case in exhibit F which was merely written by the appellant and Devi Charity Butt as it suited them and between themselves and not on the authority of a resolution at a general meeting of the company for the purpose of amending the mandate. In view of the foregoing it is not correct to accept exhibit F as a document that properly altered the mandate. Having thus concluded, exhibit G is the worst off. Exhibit G is a self engineered letter by the appellant to the respondent bank at Takoradi demanding to be reinstated as a co-signatory. It (exhibit G) equally fails the test for acceptance because it was not a certified copy of a resolution of the company and also does not meet the common sense requirement that it ought to have ideally been issued by the very two who signed the previous one, exhibit F. At its best exhibit G is a self serving document which served no beneficial banking purpose. The respondents were well within their obligations to have rejected it anyway. Thus far, it is useful to state that owing to the failed attempt to mandate Mrs Devi Charity Butt as sole signatory, any dealings she undertook in her purported capacity on behalf of the company during that failed period were without authority and therefore void. That is as far as the failed mandate (exhibit F) goes. As to whether or not there are any consequences flowing from such failure the same has to relate to any particular question raised by the appellant.

 The appellant claims that whatever occurred during the period of the failed mandate amounts to utmost irresponsibility on the part of the respondents. That cannot be the case for the simple reason that it was both the appellant and Mrs Dcvi Charity Butt who not only deluded themselves that they were altering the mandate but also succeeded in misleading the respondent into accepting Mrs Devi Charity Butt as sole signatory for awhile. The appellant and Mrs Devi Charity Butt share a substantial portion of the blame for whatever happened. In any case, in the light of previous decisions on this matter it is also obvious that the appellant herein is not a member of Chapel Hill Properties Ltd since he is not a shareholder of the company. He has also been found not to be a debenture holder of the company within the meaning of section 80 (2) of the Companies Act. The relevance of the

Supreme Court decision in Richard Butt vs Chapel Hill Properties Ltd and Another supra to this case is underscored by the fact that this question was made an issue for determination by the trial High Court. (See pages 455 to 456 of record.) Given this background one wonders what locus appellant has in impugning the fidelity of the respondents since the customer/banker relationship existed between respondent and Chapel Hill Properties Ltd in this matter and not with appellant. I simply do not find any merit in this combined ground of appeal and the same fails.


The next ground for attention is the original ground one (1). In this ground the Appellant contends that the High Court erred when it held that a resolution was passed by the company Chapel Hill Properties Ltd to remove the appellant from the mandate upon which resolution the respondent acted when no evidence of such resolution was produced. Under s. 118 of Act 179 registration of particulars constitutes actual notice of those particulars but not the contents of a document referred to or delivered with the particulars. Also s. 141 of Act 179 abolishes the constructive notice rule except as regards the register of charges. The result is that as in this case the banker is not taken to know anything relating to the internal management of the company and cannot thus be concerned with internal irregularities. It is equally pertinent to refer to section 142 of Act 179 which states that a person dealing with a company was entitled to assume that the company’s regulations have been duly complied with and the company and those deriving title under it are estopped from denying the truth of that assumption. The banker therefore before dealing with a company, must get to know the powers of the directors as prescribed in the two documents, more particularly their borrowing powers and their powers to mortgage the company’s assets, and the regulations controlling the signing and indorsing of bills and cheques. But the banker is not taken to know anything relating to the internal management of the company.

 In the context of this ground the complaint relates to internal matters of the company Chapel Hill Properties Ltd. In particular it relates to the removal of the appellant from the mandate when, according to appellant, no resolution was produced to that effect. On page 245 of the record of proceedings the appellant reiterates his assertion under cross examination that he was removed from the board by a resolution which was not produced before the court. However at page 281 of the record, the appellant made the following significant admissions under cross examination which negates his earlier assertions:

“Q. Are you saying that there is another mandate to the bank apart from this one which is not with the bank?

A. When the company was started.

By Court: Answer the question; first the question is ‘if there is another mandate apart from this one.’ Let us have the answer.

Q. Can you answer Mr. Butt, apart from this paper Exh. ‘B’ and ‘C’ that you yourself had tendered as the mandate of the bank which you have also pleaded in your case throughout and given evidence. Apart from this one is there any other mandate?

A. My Lord the (sic) to the best of my knowledge, there is no other mandate document other than this but the other director was signing when Mrs Butt was not available.

Q. Mr. Butt by this document the name of the two of you has been expressly mentioned as the two of you who should transact business for and on behalf of the company in respect of the account?

A. Yes My Lord.”

By this turn around the appellant cannot now make this same matter an issue for determination by this court because his subsequent answers put the matter to rest. In any case as has been shown earlier in this judgment the appellant was the architect of his own misfortunes when he purported to mandate Charity Devi Butt alone to act as sole signatory whilst he (appellant) was away on business tour. By this voluntary action he was not only seeking to alter the mandate, he was seeking to empower the sole signatory to ‘transact all business and sign cheques on the account alone.’ (See page 506 of record). Considered superficially one would say that the appellant cannot now turn round to complain that the respondent was wrong in according the sole signatory the recognition she deserved (wrongly) since respondent was not privy to the internal workings of the company beyond what was filed with them as their bankers. Upon a closer study however it is obvious that the respondent showed glimpses of negligence in so far as it did not detect that the letter exhibit F is a far cry from the requirement of a resolution to direct any alterations to the mandate. It however does not emerge from the proceedings quoted above and none also has been shown to this court by the appellant that apart from exhibits F and G the company sought to remove the appellant as a co - signatory to the account at the time material to this action as claimed by the appellant. This ground of appeal consequently lacks merit and is dismissed.


In his original ground two (2) of appeal, the appellant impugns the trial court’s holding that the respondents did not owe him (the appellants) a duty of care in their dealings with Chapel Hill Properties Ltd. I will deal with this ground together with the additional grounds one (1), two (2) and three (3) for the simple reason that they bear on the same facts. Let me state that I was originally minded to simply strike out ground two (2) and additional ground one (1) for offending rule 8 of CI 19 the Court of Appeal rules.  I however decided to save them and to consider them for what they are worth in order to forestall any unnecessary arguments on them. I have indicated earlier in this judgment that there are specific findings of fact made in the earlier Supreme Court decision involving the appellant and the company and others in which it was held that the appellant was neither a shareholder nor a debenture holder in the company. This being the case, the only relationship is one founded on the appellant’s claim to his equity holding. In this regard also the Supreme Court made a specific finding as to the nature of the transaction thus: “Since the 12,000 pounds was thus neither equity, in the sense of the investment of a shareholder, nor was it a gift, by process of elimination, it has to be regarded, in law, as a loan from the plaintiff to either the first defendant or the defendants, in spite of the plaintiff’s protestations to the contrary. In other words, a loan contract is to be implied from the conduct of the parties.” See page 651 of Butt v Chapel Hill ~ 2004 SCGLR) 636.

 In view of the decision of the Supreme Court above quoted, the appellant cannot be heard to be stating a different claim based upon the sum of 120,000 pounds loaned to the company as a basis for any relationship. The only relationship the appellant has with the respondent is that founded on the loan of thirty million cedis he personally obtained from the respondent. I agree with the trial judge’s finding that the respondent does not owe the appellant a duty of care in respect of the accounts of the company (Chapel Hill Properties Ltd) to warrant a claim in negligence by the appellant. What duty of care the respondent owed the appellant was in respect of the appellant’s personal account he held with the respondent and no more. Having failed to show that any duty of care was owed him by the respondent, no issue of negligence arises for any consideration. The trial judge was therefore right in dismissing these heads of claim. These combined grounds of appeal also fail. In conclusion, save for the finding that the mandate was not properly altered and therefore making any dealings based upon same void, all the remaining grounds of appeal lack merit and are dismissed. In the result the appeal fails.  We allow cost of [GH¢1,000] One Thousand Ghana Cedis for the Defendant/Respondent.



                                                                            J. B. AKAMBA

                                                                                        JUSTICE OF APPEAL



MARFUL SAU, J.A.:-      I agree.                                                     S. K. MARFUL SAU

                                                                                                            JUSTICE OF APPEAL



YAW APPAU, J.A.:-      I also agree.                                                            YAW APPAU

                                                                                                            JUSTICE OF APPEAL




Mr. Anthony Ampaw for Mr. Y. Opoku Adjaye for Plaintiff /Appellant.

Mr. Charles Hayibor of Hayibor, Djarbeng & Co for Defendant/Respondent.`