DANICOM LTD vs. GHANA COMMERCIAL BANK [2001-2002] 1 GLR 37

DANICOM LTD v GHANA COMMERCIAL BANK

[2001-2002] 1 GLR 37

Division: HIGH COURT, ACCRA

Date: 18 OCTOBER 2001

Before: OFOE J

Banking—Business of banking—Right to charges and commissions—Defendants deducting service charges from account of customers on payment orders originating from other banks—Deductions made from plaintiffs’ account without their knowledge and consent—Whether bank entitled to deduct charges—Whether plaintiffs entitled to recover deductions

The plaintiffs operated a current account with the defendants, Ghana Commercial Bank, at their branch at Sogakofe. Somewhere in 1996 the plaintiffs noticed that the defendants were taking commissions or service charge of three-eighth per cent on payment orders originating from other banks and paid into their account This charge was deducted on a number of occasions without the knowledge and consent of the plaintiffs When the plaintiffs drew the attention of the defendants to these charges alleging that they were improper, the deductions were stopped However, all attempts to get a refund of the charges already deducted, amounting to ¢16,473,165 from the defendants, were met with refusal The plaintiffs therefore instituted an action against the defendants claiming the said amount together with interest as at December 1996 to the date of final payment The defendants in their pleadings denied that the charges were improper and maintained that they had the right to impose the charges with or without the consent of the plaintiffs since that was in line with normal banking practice

Held the opening and maintenance of a bank account was basically a matter for the application of the law of contract, but because the need of customers change with time, the services offered also change accordingly. This would necessarily result in changes in duties and obligations and a corresponding change in the terms of agreement between the parties Therefore, in each case where a party made a claim against another, that party should establish the basis of the claim traceable to either an agreement or a custom in the banking business. In the instant case, the defendants by maintaining that they were entitled, to make commission deductions in respect of payment orders paid into the plaintiffs’ account, assumed an obligation to establish the contract term or custom in the banking business which permitted them to do so Having failed to discharge that burden, the plaintiffs’ claim for the amount of ¢16,473,165 would be granted with interest from December 1996 till the date of judgment

[p.38] of [2001-2002] 1 GLR 37

ACTION by the plaintiff-customer to recover money from the defendant-bank which the bank deducted as service charges from the plaintiffs’ bank account in respect of payment orders originating from other banks and paid into the plaintiffs’ account with the defendant-bank. The facts are sufficiently set out in the judgment.

Kuenyehia & Co for the plaintiff-company.

A T Totoe for the defendant-bank.

Ofoe J. The plaintiffs’ claims against the defendants are for:

“(1) The sum of ¢16,473,165 being commissions wrongly charged and deducted from the plaintiffs’ account on payment orders paid into the plaintiffs’ account with the defendants at their Sogakofe branch, which amount the defendants have refused to pay despite repeated demands.

(2) Interest on the said amount from 1 December 1996 to the date of final payment.”

The résumé of the pleadings of the parties: The plaintiffs, peddlers of petroleum products, operate a current account with the defendants, the Ghana Commercial Bank at their Sogakofe Branch. Somewhere in 1996 they noticed that the defendants were taking commissions or service charge of three-eighth percent on payment orders originating from other banks and paid into their account. This charge according to the plaintiffs was imposed without their knowledge or consent. They drew the defendants’ attention to these improper charges informing them that the payment orders are as good as cash and the charges were stopped. However, all attempts to get a refund of the charges already imposed with interest from the defendants have been met with refusal.

The defendants in their pleadings deny any such improper charges, maintaining that they have the right to impose the charges since that was in line with normal banking practice. For to them payment orders are not as good as cash as the plaintiffs contend. The defendants admit however that on the complaint by the plaintiffs they did exercise their discretion and stopped the charges but

[p.39] of [2001-2002] 1 GLR 37 this was on the pleading of their branch manager at Sogakofe. To the defendants the plaintiffs are not entitled to their claim. At the summons for direction stage the following issues were set out for trial:

(i) Whether or not the defendants charged the plaintiffs commission or service charge of three-eighth percent on payment orders originating from other banks and paid into the plaintiffs’ account with the defendants.

(ii) Whether or not the defendants can legally charge bank charges or commission on bank drafts deposited in the plaintiffs’ account without the knowledge and agreement of the plaintiffs.

(iii) Whether or not bank charges are at the discretion of the defendants.

The evidence discloses that the disputed charges were made in the form of commission against the account of the plaintiffs’ company when payment orders from other banks were lodged into their account with the defendant-bank. Counsel for the defendants cross-examined as follows:

“Q I put it to you that initially we were charging one-half percent on the value of the payment order.

A I am not aware.

Q But because of your status with our bank, it was reduced to three-eighth percent.

A I don’t know.”

The plaintiffs tendered exhibit F, a bank statement, to establish these deductions. The plaintiffs’ representative, Solomon Kpornoo’s evidence is that when they noticed the commission deductions they complained to the defendants who stopped the deductions. By the date of the stoppage, deductions of up to ¢116,473,165 had been made. The plaintiffs tendered exhibits B and C, the results of enquiries they made from other banks — Social Security Bank and Metropolitan Bank, which indicated that they do not charge any commission on payment orders paid into customers’ account.

The defendants spoke through Raphael Azumah. He maintained that they charge and they were entitled to charge commission on

[p.40] of [2001-2002] 1 GLR 37 payment orders which they process into the plaintiffs’ account. They charge these commissions because in working on the payment orders, they perform certain functions for the benefit of the plaintiffs including the risk they take in giving value to the payment orders. According to Mr Azumah, they have a scheme where concessionary commission rates are charged in respect of valued customers with specific appreciable turnover. As to who determines the rate, witness told the court they are determined from the head office and these rates are pasted at all the branch notice boards. These charges they have been imposing for the past eight years and they even continue to charge these commissions. Sylvester Komashie, a defendant witness, testified that they do not normally inform customers when circulars are sent from the head office and they do not owe customers any duty to seek their consent before they impose bank charges. He testified that any customer who applies to bank with the defendant-bank fills a mandate form and this is signed by the customer. Without this signed mandate form, no person can be a customer to their bank. Witness tendered a specimen copy of the mandate form as exhibit 2. Even though the defendants were challenged to prove that the plaintiffs signed any such mandate form, all they did was to tell the court they could not trace the mandate form signed by the plaintiffs.

Looking at exhibit 2, the mandate form, it is addressed from the customer to the Manager, Ghana Commercial Bank, as it were, asking to be a customer of the defendant-bank. It is stated, amongst others, in the mandate form that: “The company agrees to abide by the rules of the Bank governing the conduct of such accounts.” If the plaintiff-company did sign the mandate form, they were in effect subjecting themselves to the rules of the bank governing the conduct of such accounts.

Now, the opening and maintenance of a bank account is basically a matter for the application of the law of contract, but because the needs of customers change with time, the services offered by banks also change accordingly. The situation that arises is, therefore, changes in duties and obligations between the parties which result necessarily in changes in the terms of agreement between them. Thus fresh terms are added from time to time. Where

[p.41] of [2001-2002] 1 GLR 37 therefore one party makes a claim against the other, he should be able to establish the basis of his claim traceable to an agreement or custom in the banking business. Where the defendants maintain they are entitled to make the commission deduction whenever they give value to payment orders from other banks payable to the plaintiffs, then they have a duty to establish the contract term or custom in the banking business which so permits them. Whether the defendants have the power to impose charges and commission will have to arise from their contractual relation with their customer.

What happens in the other banks? The defendants have testified that the rates of bank charges are issued from the head office and these rates are pasted at the various branches of the defendant-bank. They do not need the consent of the defendants’ customers before they review their bank charges; and also as to who to be subjected to these charges and at what rate, is a determination of the defendants’ company. The question is, under what agreement or customary practice of the bank do the defendants get these overriding powers? On the evidence, the defendants sought to establish the basis of these powers from the mandate form, exhibit 2. I will agree with the defendant-bank that without the mandate form no account can be opened for a customer like the plaintiffs and even though the defendants could not trace the mandate form signed by the plaintiffs, I am of the opinion that the plaintiffs did sign such a mandate form. But how does the mandate form confer such powers on the defendants’ company? All that the form states is that an applicant customer agrees to abide by the rules governing the conduct of such accounts with the defendant-bank. But what are the rules of the defendant-bank that the plaintiff-company agrees to abide by? What are the rules which permit the defendant-company to vary and permit it to charge commission on payment orders as and when they so find economically possible? Are circulars part of the rules? We are not told. If circulars are not part of the rules then from what rules does the power to issue such circulars arise? I must say that on the entirety of the evidence before me, I am of the opinion that the defendants led no evidence to establish the rules from which their power to impose or vary bank charges originate.

[p.42] of [2001-2002] 1 GLR 37

Having failed to establish the rule or practice of banking which entitles them to the deduction they made against the plaintiffs in respect of payment orders they processed into the plaintiffs’ account, I will have to grant the plaintiffs their claim against the defendants for the sum of ¢16,473,165. I will grant the plaintiffs interest on the said amount from 1 December 1996 to date. The plaintiffs will be entitled to costs of ¢5 million against the defendants.

Judgment for the plaintiffs.

IS