IN THE SUPERIOR COURT OF JUDICATURE
IN THE COURT OF APPEAL
ACCRA - A.D 2018
GHANA REVENUE AUTHORITY - (Plaintiff/Respondent)
SIC INSURANCE COMPANY LIMITED - (Defendant/Appellant)
DATE: 18 TH OCTOBER, 2018
CIVIL APPEAL NO: H1/47/2018
JUDGES: KORBIEH J.A. (PRESIDING), SOWAH J.A, KWOFIE J.A.
LAWYERS: MR. BRIGHT O. ADJEKUM FOR APPELLANT
This is an appeal from the judgment of the High Court (Commercial Division) Accra dated 16th June 2016.
The plaintiffs’ writ of summons sought the following reliefs from the defendant:
i. Payment of the bond security of Gh¢5,000,000.00
ii. Interest on (i) above at the prevailing commercial bank rate from the date of notice until date of final payment
The basis of the claim was a Warehouse Bond issued by the defendant company guaranteeing payment of all revenue lost arising from non-payment of customs and excise duties on goods warehoused under bond by Novel Commodities Ghana Ltd. The Bond security was for GH¢5 million and was for the period 10th April 2013 to 9th April 2014.
In a statement of defence, the defendant though admitting the facts pertaining to the issuance of the Bond and her obligations thereunder denied that there was any justification for the formal demand on her for the bond security. She called for strict proof of the purported loss, omission, default or breach under the bond.
A witness statement was duly filed by the plaintiff's representative, one Samuel Bentil together with the documents the plaintiff intended to rely on at the trial [see pages 24-70 of the record]. Mr. Bentil attended court on 5th April 2016 to testify but neither the defendant nor her counsel was present to cross-examine him. Plaintiff thereupon closed its case and the court adjourned the case for judgment.
In the judgment, the learned trial judge noted that notwithstanding several notices of scheduled dates for trial evidenced by numerous affidavits of service on the docket, neither the defendant nor its counsel was in court to contest the case. The trial judge also noted that the defendant had failed to comply with case management orders to file its witness statement and pre-trial check list; hence the statement of defence filed by the defendant had been struck out in accordance with order 32 rule 7A of the High Court (Civil Procedure) Rules 2004, C.I. 47. This was on 29th February 2016 as per court notes at page 72 of the record.
In the view of the learned trial judge, the only triable issue in the circumstance was whether or not the plaintiff was entitled to the reliefs as endorsed on the writ of summons.
Her conclusion after looking at the applicable law and the evidence on record was that she was satisfied that the plaintiffs' action should succeed. She therefore entered judgment for the plaintiff on 18th June 2016 for reliefs (i) and (ii) of the writ of summons and costs of GH¢50,000.00. The judgment is at pages 76 - 84 of the Record of appeal.
Aggrieved by the judgment, the defendant filed a Notice of Appeal on 5th September 2016 with the following grounds of appeal:
Grounds of Appeal:
a. The judgment is against the weight of the evidence
b. The learned trial Judge erred in law when she suo motu struck out the Statement of Defence filed by the defendant and proceeded to accept the case of the plaintiff as unchallenged.
c. The learned trial Judge erred in law when she found defendant liable for Gh¢5million notwithstanding plaintiff’s own showing that the alleged liability of Novel Commodities Ghana Limited to the plaintiff, predated the Guarantee Bond executed by the defendant for the plaintiff
d. The learned trial Judge erred in law when she found defendant liable under the Guarantee Bond although the conditions precedent for liability under the Guarantee Bond had not been met
e. The learned trial Judge erred in law by not affording the defendant the opportunity of full and fair hearing and to challenge the case of the plaintiff
f. The learned trial Judge erred in law when without having established that the alleged loss was due to the omission, negligence or breach of law of Novel Commodities Ghana Limited as required by the Guarantee Bond, she found the defendant liable under the Guarantee Bond.
g. The learned trial Judge erred when she found the defendant liable notwithstanding the fact that the alleged losses were on plaintiff’s own showing as a result of the collapse in monitoring and absolute neglect of duty by the plaintiff and by so doing the court has aided the plaintiff to benefit from its own wrongs.
h. Additional Grounds to be filed upon receipt of the Record of Appeal.
It is placed on record that no additional grounds were filed by the defendant/appellant as had been intimated in the Notice of Appeal.
In his written submissions, the appellant’s counsel first argued ground (c) of the appeal followed by grounds (d), (f) and (g) together, then the omnibus ground (a) and finally grounds (b) and (e) together.
In respect of grounds (b) and (e), the defendant/appellant argues that the trial judge erred when she suo motu struck out her statement of defence. It is contended that by denying her the opportunity to participate in the trial after her defence was struck out, not only has the Defendant’s right to natural justice been impaired, but Defendant has also suffered a substantial miscarriage of justice.
With respect to the grounds numbered (c), (d), (f) and (g), they all argue aspects of the purported errors by the trial court in finding the defendant liable. They raise issues of mixed law and fact and require an analysis of the evidence adduced in support of plaintiffs' case. Consequently it is my view that, they can all be considered together under the omnibus ground (a)
The Defendant/Appellant argues that the trial judge erred when she found it liable for GH₵5 million under the Guarantee Bond because the conditions precedent for liability under the bond had not been met, that the alleged liability of the Principal Debtor predated the Guarantee Bond, that the alleged losses were on Plaintiff’s own showing as a result of the collapse in monitoring and absolute neglect of duty by the Plaintiff and because it had not been established that the alleged loss was due to the omission, negligence or breach of law by the Principal Debtor.
The plaintiff/respondent did not file any written submissions.
Grounds (b) and (e)
The core issue for determination raised by grounds (b) and (e) is whether the Defendant was denied the opportunity of full and fair hearing to challenge the case.
Counsel concedes what the record clearly shows at pages 71 and 72, namely, that at the court's sitting on 15th February 2016, the defendants' representative was in court and was admonished for failure to comply with the court's order to file its pre-trial check list, witnesses’ statements and supporting documents. A warning was issued that a last chance was being given to enable filing of the processes, failing which the defendants' defence would be struck out. The warning fell on deaf ears and the statement of defence was duly struck out on 29th February 2016.
In his submissions, counsel correctly narrates these circumstances which led to the striking out of defendants' statement of defence and apologises on behalf of defendants' in-house counsel who had conduct of the case at the time. It is therefore surprising that despite this admission of negligence, the trial court is being accused of denying the defendant a fair hearing.
Rule 7A(3) of Order 32 gives a trial judge discretion where a party has failed to comply with any of the directions given at a case management conference or a pretrial review or both, to make any of the following orders:
“(a) strike out the action, if the non-complying party is a plaintiff;
(b) strike out the defence and counterclaim as the case may be, if the non-complying party is a defendant;
(c) order any party to pay costs; or
(d) make any other appropriate order.”
The set of facts disclose no error on the part of the trial judge or a miscarriage of justice against the defendant. The Court exercised discretion and proceeded in the absence of defendant since the defendant attached no seriousness to the trial of the case. A trial judge has a duty to ensure the speedy determination of a matter within the bounds of the rules. The onus lies on parties also to diligently prosecute or defend their case to avoid unnecessary delay. See Order 37 r 2 of CI 47, Lagudah vs. Ghana Commercial Bank [2005-2006] SCGLR 388 and Republic v. High Court (Fast track division) Accra; ex-parte State Housing Co. Ltd (No 2) (Koranten-Amoako Interested Party)  SCGLR 185 where the Court said:
“A party who disables himself or herself from being heard in any proceedings cannot later turn around and accuse an adjudicator of having breached the rules of Natural Justice.”
It is trite that judicial discretion cannot be fettered so long as it is exercised judicially having regard to the facts and the surrounding circumstances of each case and guided by principles of justice and fairness.
The Supreme Court in Agbosu & 5 ors vs. Kotey & ors  2 MLRG 111 at holding 3, held that:
“an appellate court will only interfere with exercise of trial court’s discretion in exceptional circumstances on the grounds that the discretion was exercised on wrong or inadequate materials, if it could be shown that the court acted under a misapprehension of fact in that it either gave weight to irrelevant or unproved matters or omitted to take relevant matters into account.”
We find no cause to interfere with the discretion exercised by the trial judge.
It is also contended that although the case was adjourned on 29th February 2016 to 17th March 2016 for the plaintiff to open its case, however hearing commenced and concluded on 5th April 2016 with no indication on the record as to why hearing was not conducted on the original adjourned date or whether the defendant was notified of the proceedings of 17th March and 5th April 2016.
This allegation of non-service being made by the defendant was capable of proof and it would have served the defendant better if a search report was on the Record confirming that in fact the defendant had not been served with hearing notice of the trial contrary to what the Court Notes indicate.
What the record shows is that the trial judge was clearly mindful of her duty to ensure that the defendant had received adequate notice of trial. For example, statements can be found at pages 78 and 79 touching on the fact that “the defendant was served with several hearing notices of the scheduled dates for trial as well as Court Notes through its Solicitor, as evidenced by the numerous affidavits of service on the record.”
We find no merit in grounds (b) and (e) which are accordingly dismissed.
Grounds (a), (c), (d), (f) and (g)
It is trite that an appeal on the ground that the judgment is against the weight of the evidence led at the trial, empowers the appellate court to rehear the matter by taking another look at the evidence, and analysing the entire record of appeal to arrive at its own decision whether the conclusions of the trial judge are reasonably or amply supported by the evidence. The appellate court is entitled to draw inferences from the facts and evidence to the same extent as the trial court could. See the cases of Tuakwa vs Bosom [2001-2002] SCGLR 61 and GIHOC vs. Hanna Assi [2005-2006] SCGLR 458.
The appellant has a burden to displace the presumption that the judgment of the trial court on the facts is correct. It has to be shown from the evidence on record that the judgment was indeed against the weight of the evidence. See Oxyair Ltd & Darko vs. Wood & ors. [2005-06] SCGLR 1057, Ampomah vs. Volta River Authority [1989-90] 2 GLR 28]
Having examined the record of appeal and in the light of the pleadings and the evidence adduced at the trial as well as the grounds of this appeal, we agree with the trial judge that in the circumstance, the fundamental issue was whether or not the plaintiff was entitled to the reliefs as endorsed on the writ of summons. Stated differently, the issue at the trial and in this appeal is whether the plaintiff discharged the burden to prove her case on the preponderance of probabilities as required by sections 12 of the Evidence Act 1975, NRCD 323.
To entitle it to judgment for the reliefs claimed, the plaintiff had to discharge the burden of proof irrespective of whether the defendant attended the trial or not.
The appellants' counsel submits that the learned trial judge did not discharge her duty as it is clear that there was ample evidence on the record, even in the absence of cross examination, for a rejection of the plaintiffs' case.
The matters raised by appellant’s counsel as supporting the above contention include the following:
That the alleged liability of Novel Commodities Ghana Ltd pre-dated the guarantee bond executed by the defendant for the plaintiff.
That the conditions precedent for liability under the guarantee bond had not been met.
It was not established that the alleged loss was due to the omission, negligence or breach of law by Novel Commodities Ghana Ltd as required by the guarantee bond.
Since by the plaintiffs' own showing, the alleged loss was as a result of the collapse in monitoring and absolute neglect of duty by plaintiffs' officers, the trial judge erred in finding the defendant liable. By finding the defendant liable, the court has aided the plaintiff to benefit from its own wrongs.
The sum of these submissions is that the Defendant’s liability under the Guarantee Bond had not been proved to warrant judgment in favour of the plaintiff.
The evidence adduced by the plaintiff is found in the Witness statement of Samuel Bentil and the marked exhibits/documents attached thereto. The pith of the evidence is that an audit was conducted into the activities of Novel Commodities Ghana Ltd which covered the period 28th March 2012 to 4th June 2013. This audit revealed a short-collection of GH¢10,783,458,558 arising from taking un-entered goods from the customs bonded warehouse. Consequently, a demand letter and a distress warrant was issued against Novel Commodities Ghana Ltd. When these did not yield any results, a formal demand was made on the defendant to make good the bond security. The defendant failed to make payment hence the writ of summons.
Even in the absence of a statement of defence, a case ought to be heard on its merits. This is because except in cases where the Rules specifically make an exception, the onus on a plaintiff to prove his case on a preponderance of probabilities is not dependent on whether a defendant has entered a defence or not.
The trial judge rightly identified the terms of the Bond exhibit A, reviewed applicable case law, the Evidence Act and the Law of Guarantees and narrowed the question in issue down to ‘…whether a demand could be made on the defendant Guarantor to indemnify the plaintiff against this loss for the full value of the bond in the face of this proven breach of the Principal Debtor’s obligations?’ In other words whether or not the plaintiff was entitled to the reliefs as endorsed on the writ of summons.
However, in my view, the trial judge reached the wrong conclusion as she failed to properly evaluate the facts and evidence in determining whether they sustained the plaintiffs’ claims.
To determine if Defendant’s liability had arisen, the conditions under the bond that needed to be met had to be identified; that revenue was lost to the state arising from the non-payment of customs duties, excise duties and all other lawful taxes eligible on goods warehoused under the bond in the licensed premises, that revenue lost was due to the omission, commission, negligence or breach of law by the Principal Debtor whilst goods remain under bond, that Plaintiff notified Defendant of the loss, omission, default or breach which may lead to a claim under the bond within one year after the expiration of the bond and finally that the bond covered the period in which the losses were incurred.
The last issue of the period of the bond was very crucial to the success of the claim. The fact that the bond was executed to cover a particular period means that even where the other conditions had been met, so long as the bond fell outside the period the audit covered, then no liability would be incurred under the bond.
A bond is not intended to have retrospective effect. From the evidence on record though the stock check exercise was conducted from 13th May, 2013 to 14th May, 2013, the audit reconciliation actually started from March 28, 2012 to consider all transactions conducted in the warehouse. This check period pre-dated the bond agreement.
The defendants' contention is that at best only losses established for the period 10th April 2013 to 4th June 2013 could be attributed to the defendant.
From the facts revealed by the audit report, it is safe to infer and conclude that the warehouse contained goods dating back to March 2012 before the bond agreement between the defendant and
Novel Commodities Ltd was signed and took effect on 10th April 2013.
In such circumstance, the defendant could only be fixed with liability for losses of those goods if the Report showed that those goods were still in the warehouse when the defendants' bond took effect in April 2013. However, it is not clear from the Report when the losses were incurred on those goods. It was essential that the Report should indicate that those goods were taken out without payment of duties after the defendant’s bond took effect.
According to plaintiff’s evidence, it was a requirement that to operate a Customs Bonded Warehouse, a general bond had to be executed for security of the warehoused goods. If so, then what guarantee bond covered the warehouse in 2012 or as at 28th March 2012 at the start of the audit when the defendant had not signed the agreement with Novel Ltd?
A careful reading of Mr. Bentils evidence does not provide any answers to these issues. It merely narrates the facts about the Bond agreement, the stocktaking audit, and the actions taken by the plaintiff in an attempt to realize the bond security. It also merely denies the assertions in the defendants' statement of defence that no short collection had been revealed which justified the formal demand upon it.
The burden of persuasion requires proof by a preponderance of the probabilities. As these important questions were left unanswered it meant the plaintiff had failed in the duty imposed by section 11(4) of Evidence Act 1975, NRCD 175 ‘to produce sufficient evidence so that on all the evidence a reasonable mind could conclude that the existence of the fact was more probable than its non-existence’.
The issue was not whether there had been a breach by the principal debtor. The key question was whether a demand could be made on the defendant to fully indemnify the plaintiff for the full value of the bond without establishing that the losses occurred during the period covered by defendants' bond agreement.
The audit check period pre-dated the bond agreement. Under the circumstances the defendant’s liability under the bond had not arisen, and the trial court erred in finding the defendant liable for the debt/breaches of the principal debtor.
It is our conclusion that the judgment delivered on 16th June 2016 was against the weight of evidence and has occasioned a miscarriage of justice.
It is for the above reasons that the appeal succeeds. The judgment of the trial High Court is hereby set aside