Customer sues bank

Following the eventual resolution of the matrimonial proceedings, Mr. Abraham sued Fidelity Bank for breach of contract, negligence and defamation, arguing that the bank had unlawfully ignored both his banking instructions and the court's express orders.

The High Court agreed, finding that the bank had no lawful basis for freezing the accounts and awarded damages exceeding GH¢800,000 together with interest and costs. Fidelity Bank subsequently appealed.

Court rejects bank's justification

Before the Court of Appeal, Fidelity Bank argued that it had merely sought to preserve the disputed funds after receiving notice of the injunction application and subsequent applications filed during the matrimonial litigation.

The appellate court rejected that argument.

Justice Emmanuel Senyo Amedahe whose opinion received a delightful reasoned concurrence from Bernasko Essah JA, stressed that the bank was never a party to the matrimonial proceedings and therefore could not unilaterally assume powers that neither the law nor the court had conferred upon it.

The court observed that a bank cannot freeze a customer's account merely because litigation involving the customer is pending. Unless there is a valid court order directed at the bank or another lawful statutory basis for doing so, the banker-customer relationship remains governed by contract, requiring the bank to honour its customer's lawful instructions.

The court warned that accepting Fidelity Bank's position would create a dangerous precedent whereby any litigant could effectively immobilise another person's bank account simply by serving court documents on the person's bank.

Court criticises bank's conduct

The Court of Appeal endorsed much of the trial judge's criticism of Fidelity Bank's conduct.

The court held that instead of obeying the clear order directing it to release Mr. Abraham's accounts after paying half of the disputed funds to his wife, the bank chose to file its own applications seeking "further directions" despite not being a party to the proceedings.

In one of the judgment's strongest passages, the court adopted the trial judge's characterisation of the bank's actions as a "reckless voyage," accusing it of assuming responsibilities it had no legal authority to exercise and allowing itself to be influenced by the wishes of a third party rather than complying with the court's order.

According to the court, court orders are binding commands, not suggestions, and must be obeyed unless stayed or set aside by a competent court.

Defamation finding overturned

One aspect of the High Court's judgment did not survive the appeal. The High Court had held that Fidelity Bank defamed Mr. Abraham by dishonouring a cheque he had issued to his lawyer.

The Court of Appeal disagreed.

It held that although the cheque was indeed dishonoured, the essential legal ingredient of publication was missing because the lawyer presenting the cheque already knew that the account had been frozen. Without publication to a third party who was unaware of the circumstances, the tort of defamation could not be established.

Accordingly, the finding of defamation was set aside.

Damages reduced but liability maintained

While affirming that Fidelity Bank breached its contractual and fiduciary duties and acted negligently, the Court of Appeal concluded that some of the damages awarded by the High Court were excessive.

The court reduced the award for general damages from GH¢200,000 to GH¢100,000 and cut the exemplary damages from GH¢400,000 to GH¢200,000. It also varied the order on interest, directing that interest be paid only on US$65,000, the half of the funds that remained available to Mr. Abraham after the interim order, from 6 June 2018 until the consent judgment was entered in January 2021.

Why the decision matters

The Court of Appeal reaffirmed that the banker-customer relationship is fundamentally contractual and that financial institutions owe customers duties of loyalty, reasonable care and fidelity. Even where litigation is pending over funds held in an account, banks must act strictly within the scope of court orders and statutory authority rather than on precautionary assumptions or requests from third parties.

The decision also serves as a reminder that compliance with court orders is mandatory. Institutions that ignore express judicial directives, even in the belief that they are protecting the interests of litigants, risk substantial civil liability for breach of contract and negligence.

The ruling draws a clear line between prudent compliance with lawful court orders and unlawful interference with a customer's access to his own funds. It confirms that banks cannot become self-appointed arbiters in disputes between private parties where the law has not expressly empowered them to do so.