Court exonerates Ivory Finance, Ital

An Accra High Court, Commercial Division, on Friday, April 17, 2015, struck out the names of Ivory Finance Company Ltd, Ital Construction International Ltd and two of its directors from a case of fraud at the instance of SIC Insurance against the parties; a ruling that paves the way for Ivory Finance to demand the payment of an outstanding amount in excess of GH¢160 million, including interests.

The debt, which has been a source of tussle between SIC Insurance, its client, Ital Construction, Ivory Finance and others, resulted from a credit guarantee bond the insurance company issued to Ital to secure a GH¢19.3 million credit line from Ivory Finance.

Ital failed to repay the credit it secured from Ivory Finance in March 2013 which was covered by a six-month credit guarantee bond from SIC Insurance. The finance house sent a demand notice to the construction company and subsequently made a call on the guarantee bond, writing to notify SIC that their mutual client, Ital Construction, had defaulted in repaying the credit facility and therefore requested SIC Insurance to pay the amount, which had then accrued to GH¢19.30 million as of October 2013. 

After several attempts to get SIC to make good the credit guarantee, Ivory Finance proceeded to court and secured an order, a Consent Judgement against SIC Insurance to pay the sum, which had then ballooned to GH¢160,834,493.19 (GH¢160.8 million) as of the end of January this year, including interests and other charges.

Again, SIC Insurance defaulted, thus compelling Ivory Finance to secure an order to garnishee the accounts of both SIC and Ital.

After SIC had secured a conditional stay of execution ruling which ordered it to pay the minimum GH¢19.3 million, it proceeded to file an application at the High Court, praying the court to declare that the parties, including the insurance company’s former Managing Director, Ms Doris Awo Nkani, had been fraudulent in colluding to bring a debt of more than GH¢100 million against it.

However, the court, presided over by Justice Samuel K. A. Asiedu, struck out the names of all parties, except Ms Nkani, following a response application filed by Ivory Finance to the court to dismiss the suit for being frivolous, vexatious and its failure to disclose any reasonable cause of action.

The court held that SIC Insurance could not have any action against Ivory Finance and Ital Construction and that the company was liable for the actions of its managing director.

Background

When Ital failed to repay the credit it secured from Ivory Finance in March 2013, the finance house sent a demand notice to the construction company and subsequently made a call on the guarantee bond, writing to notify SIC that their mutual client, Ital Construction, had defaulted in repaying the credit facility and therefore requested SIC Insurance to pay the amount, which had then accrued to GH¢19.30 million as of October 2013. 

The finance house also made its intention of instituting a legal action known in the same notice dated October 18, 2013.

Ivory Finance then proceeded to file a suit at the Commercial Division of the High Court on November 22, 2013, praying the court for the recovery of  the total amount of GH¢19.3 million plus agreed interest which had accrued. 

At pre-trial – one of the processes used at the Commercial Court – the defendants pleaded for an adjournment, but they failed to honour their obligation; a situation which again compelled the court to refer the matter to a trial judge for adjudication.

At trial, therefore, Ivory Finance filed for a summary judgment for a total sum of GH¢91.92 million, which had accrued as of October 7, 2014. 

However, when the debtors defaulted again to the agreed Terms of Settlement, the parties then entered the terms as consent judgment at the High Court Commercial Division, which then repudiated any concessions such as the freezing of interest. The debt had accrued to GH¢160,834,493.19 (GH¢160.8 million) as of the end of January this year.

After several failed attempts to settle the debt with Ivory Finance within agreed payment schedules, the finance house went for an order to garnishee the accounts of SIC Insurance and its client Ital International.

SIC’s stay of execution and fraud actions

Consequently, the insurance company applied to the High Court, Commercial Division, for a stay of execution, pending the determination of the fraud action it had filed against Ivory Finance, Ital Construction and Doris Awo Nkani, the former managing director of SIC, to set aside the Consent Judgment.

The court, presided over by Justice Koomson, on February 26 conditionally granted SIC’s application, ordering SIC to pay the amount of GH¢19.3 million to Ivory Finance within 21 days pending the determination of its action against Ivory Finance.