The Accra High Court has awarded GH¢100,000 in general damages against Prudential Bank Limited after finding that the bank unlawfully called in and recovered a customer’s loan facility without first issuing the statutory notice required under Ghana’s Borrowers and Lenders Act, 2020 (Act 1052).
In its judgment delivered on 10 July 2026 in Reynolds & Associates Limited v. Prudential Bank Limited (Suit No. CM/BDC/0051/2024), the Accra High Court through Her Ladyship Justice Sedinam Agbemava held that although Reynolds & Associates Limited had not adhered strictly to the agreed monthly repayment schedule under its loan agreement, the bank’s conduct over the life of the facility amounted to acquiescence.
Consequently, the court ruled that Prudential Bank could not abruptly declare the loan in default and debit the customer’s account without first complying with the law.
The dispute arose after Reynolds & Associates Limited requested that an overdraft facility of GH¢404,970.06 be converted into a 24-month loan in October 2021. The parties executed a Heads of Agreement under which the company was to repay the facility through equal monthly instalments.
On 17 May 2023, however, Prudential Bank debited the company’s account by GH¢187,536.69 to recover the outstanding balance, prompting the company to commence legal proceedings alleging breach of contract and seeking, among other reliefs, reversal of the debit, compensation of GH¢1 million, damages, and costs.
The bank defended its actions by arguing that the plaintiff had defaulted on the agreed repayment schedule and that the loan agreement entitled it to exercise a contractual right of set-off over funds standing to the customer’s credit. It further maintained that the plaintiff’s proposal to settle the outstanding indebtedness with a reduced lump sum merely confirmed that it had fallen into default, thereby entitling the bank to call in the facility.
After reviewing the evidence, the court rejected the bank’s assertion that the plaintiff’s irregular repayments alone justified the immediate foreclosure. Justice Agbemava observed that although the plaintiff had made payments on an ad hoc basis rather than in accordance with the repayment schedule, the bank had consistently accepted those payments without protesting or declaring any default. Instead, correspondence exchanged between the parties shortly before the disputed debit encouraged the plaintiff to continue servicing the loan and maintaining its business relationship with the bank.
The court found that the bank only moved to recover the entire outstanding balance after rejecting the plaintiff’s request to settle the facility with a reduced one-off payment. In the court’s view, this amounted to a “knee-jerk response” rather than a lawful exercise of its contractual rights. The judge noted that the 24-month tenure of the loan had not yet expired when the bank recovered the full outstanding balance.
Justice Agbemava further held that even if the bank considered the plaintiff to be in default, Section 60 of the Borrowers and Lenders Act, 2020 required it to issue a written notice of default and afford the borrower thirty days to remedy the breach before enforcing its security. Having failed to comply with that statutory obligation, the bank was found to have breached both the governing law and its contractual obligations.
While the court found in favour of the plaintiff on liability, it declined to award the substantial compensation sought for alleged financial losses. Reynolds & Associates had argued that the money debited from its account belonged to a client and was intended to clear imported goods.
However, the court held that the company failed to produce sufficient evidence identifying the alleged customer or proving that the deductions caused the specific losses claimed. The court therefore dismissed the claims for special compensation as unproven.
Nevertheless, the court concluded that the bank’s unlawful foreclosure constituted a breach of contract warranting an award of general damages. Relying on established Ghanaian authorities on general damages, Justice Agbemava awarded Reynolds & Associates Limited GH¢100,000 in damages together with GH¢35,000 in costs, while dismissing the remainder of the plaintiff’s claims.
The decision provides important guidance on the relationship between contractual rights of lenders and the mandatory procedural safeguards established under the Borrowers and Lenders Act. It cautions that even where a borrower has fallen behind on agreed repayments, lenders must comply with statutory notice requirements before enforcing security or recovering outstanding indebtedness.
