STANDARD BANK OFFSHORE TRUST CO. LTD. vs. NATIONAL INVESTMENT BANK LTD. AND OTHERS

The 1st Defendant/Appellant, National Investment Bank Ltd (NIB), through its then Managing Director, Mr. Daniel Charles Gyimah (3rd Defendant), guaranteed thirty promissory notes issued by the 2nd Defendant to mature in 2009. These notes were discounted by investors represented by the Plaintiff/Respondent, Standard Bank Offshore Trust Co. Ltd., with proceeds paid into NIB's correspondent bank account in London. Upon maturity, payment was refused by NIB, which denied knowledge of the notes and guarantee. The Plaintiff sued for recovery of $60 million plus interest. NIB denied the guarantee, alleged fraud, lack of authority of the Managing Director, and failure of due diligence by the Plaintiff. The 2nd Defendant admitted executing a Collateral Management Agreement but denied operationalizing it or liability to the Plaintiff. The 3rd Defendant did not file a defense but participated in trial.

MARIAMA OWUSU, J.A.: “The Rule in Turquand’s” case or the “Indoor Management Rule” is that, a person dealing with a company was entitled to assume, in the absence of facts putting him on notice or inquiry, that there had been due compliance with all matters of internal management and procedure required by the regulations of the company. This rule had been codified in Sections 139-143 of our Company’s Code, 1963 (Act 179) and under Section 142 (2) of Act 179, if the company had held out someone as its agent, it would be estopped from denying the appointment; and a de jure or de facto officer of the company could be assumed to have the usual powers and duties of that sort of officer.” See the case of Godka Group of Companies vrs. P. S. International Ltd. (2001-2002) SCGLR 918, 922 holding (6) which had quoted with approval the English case of Royal British Bank vrs. Turquand [1843-60] ALL ER Rep 435. The facts of this case admit no controversy. The 1st defendant/appe...