AFAM CONCEPT vs. SONIAG COMPANY LTD
  • IN THE SUPERIOR COURT OF JUDICATURE
    IN THE COURT OF APPEAL (CIVIL DIVISION)
    ACCRA - A.D 2017
AFAM CONCEPT - (Plaintiff/ Respondent/Appellant)
SONIAG COMPANY LTD - (Defendant/Applicant/Respondent)

DATE:  26TH OCTOBER, 2017
CIVIL APPEAL NO:  H1/122/2017
JUDGES:  E K. A. ACQUAYE JA (PRESIDING), S. DZAMEFE JA, M. M. AGYEMANG (MRS.) JA
LAWYERS:  NANA BOAKYE ADU-POKU FOR THE PLAINTIFF / APPELLANT
AKOSUA GYAMFI-DUAMROH FOR THE DEFENDANT / RESPONDENT
JUDGMENT

AGYEMANG JA:

In this appeal, the plaintiff/respondent/appellant (referred to as the plaintiff), seeks a setting aside of

 

the ruling of the High Court (Commercial Division) of 26th September 2016 which granted the prayer sought by the defendant/applicant/respondent (referred to as the defendant), for the plaintiff to provide security for the costs of the plaintiff’s suit.

 

The matters giving rise to the appeal are indeed simple.

 

The plaintiff herein, the manufacturer of health and beauty products, based in the USA trading as such company, and also as JF Lab Inc., a company said to be owned by it, entered into an agreement with the defendant for the supply of its products to the defendant, a company registered in Ghana. The terms of the transaction were that the defendant would make a down-payment of fifty-percent of the price of the goods supplied to it and then pay the balance on an eighty-day credit window. The parties kept a running balance of payments and outstanding indebtedness. Following a reconciliation exercise, the plaintiff commenced action against the defendant for the payment of the sum of USD320, 839.43 being an alleged outstanding balance owed by the defendant to the plaintiff, together with interest and costs.

 

The defendant responded to this claim by asserting in an oblique fashion, that even if the said sum was owed by it to the plaintiff, it was not comparable to the sum owed the defendant by the plaintiff, sums of money described as unrecorded payment, freight overcharges, as well as interest on the said amount, an alleged total of USD2, 111,683. This alleged sum, as well as damages for fraudulent misrepresentation were claimed by the defendant in a counterclaim.

 

The defendant then applied to the court for the plaintiff to be made to provide security for costs.

 

In his ruling, the learned trial judge in granting the application said inter alia that: “…the defendant has raised counterclaim against plaintiff and therefore their fear of inability to reap fruits of their success in the case is not fluke or non-existent due to the fact only even that plaintiff is nonexistent company within the jurisdiction. Defendant claim is legitimate [sic].

 

The duty now is on plaintiff to establish that it has sufficient resources to act as enough security for any judgment debt in event it loses the case or unable to defend the defendant’s counterclaim.”

 

It is against this ruling that the instant appeal has been brought. The plaintiff set out five grounds of appeal which we set out in extenso:

 

The learned High Court judge did not exercise his discretion properly when His Lordship took into an account an irrelevant consideration, being the sum claimed in the counterclaim of the defendant;

 

That the learned High Court Judge, in exercising his discretion ignored a relevant consideration that the costs to be awarded in defending the plaintiff’s claim cannot exceed the amount being claimed by the plaintiff;

 

That the learned trial judge’s discretion was exercised against the test of the Wednesbury principle;

 

The learned judge misconstrued the motion for security for costs as an application for security for satisfaction of the judgment when same was not what was before him,

 

The ruling is against the weight of the evidence.

 

We will consider the first four grounds (a. b. c. d.) together, as they all essentially complain of the manner in which the learned trial judge exercised his discretion in the consideration of the application that was brought before him.

 

Was the discretion wrongfully exercised or in disregard of the Wednesbury principles?

 

In the application before the court below, it was deposed on behalf of the applicant, that the application had been brought because the plaintiff was a company based in Illinois Chicago, USA and that there was “no visible means of proceeding against it for the payment of the Applicant’s costs should the Defendant be successful on [sic] its defence of the suit”.

 

That would bring the application within the ambit of Order 24 Rule 1(1)(a) of the High Court (Civil

Procedure) Rules 2004 CI 47 which reads as follows:

 

Where, on the application of a defendant, it appears to the Court that

(a) the plaintiff is ordinarily resident outside Ghana…the Court may, having regard to all the circumstances of the case, order the plaintiff to give such security for the defendant's costs of the proceedings as it thinks just.

 

In the instant application, what the court was called upon to do was to exercise its discretion to require the plaintiff whose ability to satisfy the payment of costs was not apparent by reason of its non-resident status, to furnish security for such payment should he be unsuccessful in his plaint before the court.

 

The instant appeal is thus against the exercise of the court’s discretion when it granted the defendant’s application, and ordered the plaintiff to furnish security for the payment of costs.

 

In our consideration of the complaints raised in the instant appeal, we must be clear that the duty of the appellate court to interfere with the exercise of discretion precludes the substitution of the appellate court’s discretion for that of the trial court. This is because such an appeal is not from the discretion of the trial court to the discretion of the appellate court, see per Adzoe and Baddoo JJSC Kyenkyenhene v Adu [2003-2004] SCGLR 142: also Ballmoos v Mensah [1984-86] 1 GLR 724.We are empowered to interfere with such exercise of discretion where its wrongfulness has been demonstrated by the appellant, see: Patience Arthur v Moses Arthur, Review Motion 34/19/2013decided on 4th February 2014 (Unreported)and the court is satisfied that the trial judge exercised the discretion on “wrong or inadequate materials, if it can be shown that the court acted under a misapprehension of fact in that it gave weight to irrelevant or unproved matters or omitted to take relevant matters into account”, see: Blunt v Blunt [1943] AC517 at 518 HL, approved in Ballmoos v Mensah (supra).

 

In determining the propriety of the grant of the application, we have had regard to the matters that properly ought to exercise a trial court in the consideration of an application for a plaintiff to furnish security for costs.

 

The purpose of an order to provide security for costs, is to ensure that an unsuccessful non-resident plaintiff would not leave the defendant with his costs of suit unsatisfied, and that there would be funds available within the jurisdiction to meet such costs, see Porzelack KG v. Porzelac (UK) Ltd [1987] 1 All ER 1074 at 1076, per Browne Wilkinson V-C. It is for this reason that although the non-resident status of the plaintiff is a condition precedent to the bringing of the application, that fact alone would not guarantee the grant of the order sought. Indeed, where a plaintiff against whom such an order is sought is able to demonstrate that he has means within the jurisdiction to satisfy the payment of such costs should he not be successful in his suit, the application may be refused, see per Thesiger LJ in Redondo v Chaytor and Anor (1879) 4 Q.B.D. 453:“…if a person is permanently resident without the jurisdiction but has property within it, no security will be required…”.

 

In affidavits (a main, as well as supplementary affidavit) sworn on behalf of the plaintiff, the plaintiff deposed that it had assets within the jurisdiction, these were alleged to be receivables from business entities within the jurisdiction with which the plaintiff had trade dealings. As evidence of the alleged means, the plaintiff provided the names of six such companies as: DD Acme Ltd, Accra, Fuammat Co. Ltd, Accra, Sheila Amerley Enterprises, Mamprobi, Accra, Fipong Enterprise Ltd, Makola Market, Accra, Kevy’s Ltd, Kumasi and Slid Industries, Accra within the jurisdiction. The plaintiff however exhibited accounts of receivables from only two of the said companies: Fuammat Co. Ltd in the sum of USD 62,731.90,and Fipong Enterprise Ltd in the sum of USD 27,640.90, as well as its possession of a 2004 model Toyota Fortuner registered in the name of J.F Labs Ghana Ltd.

 

It was therefore for the learned trial judge in the exercise of his discretion, to have indicated that he had arrived at his decision to grant or refuse the order, having had regard to the fact of the plaintiff’s non-residence and also, the evidence of receivables and assets within the jurisdiction. Instead, the learned trial judge concerned himself with what he held to be the justifiable fear of the defendant that his counterclaim if successful, may not be satisfied by a non-resident defendant to the counterclaim (plaintiff). Contrary to the respondent’s submission, the entire ruling of the learned trial judge relied on the fact of the counterclaim, it was not a mere mention as canvassed. The learned trial judge thus confused the instant application with one in which an absconding defendant or a defendant who attempts to remove his property from the jurisdiction would be required to furnish security for the payment of a judgment debt under Order 73 of CI 47.

 

The learned trial judge in that regard, gave consideration to the irrelevant matter of the counterclaim filed by the defendant against the plaintiff, rather than the main matter that should have exercised him: whether or not in the event that the suit was not successful, the plaintiff would be able to satisfy the defendant’s costs upon his counterclaim.

 

Furthermore, the learned trial judge, apparently obviously labouring under the misapprehension that the application was to secure funds for the payment of a possible judgment debt upon the defendant’s counterclaim, made an order for the plaintiff to furnish security in the sum of USD400,000 which was far in excess of what the plaintiff’s suit claimed. Costs follow the event, and unless is subjected to taxation, lies in the discretion of the court. The quantum of costs is often dictated by how much work the parties put into prosecuting or defendant a suit, the nature of the suit itself, counsel’s fees, and expenses expected to be incurred in that regard. The costs of successfully defending a suit will thus ordinarily, in a debt recovery suit, not be expected to exceed the amount claimed. It is clear that in making the order for the security of that excessive sum of USD400,000, the learned trial judge did not advert his mind to this pertinent fact. Although the said sum, was not the same as the amount sought by the counterclaim and could not therefore be said to have been directed by it as obtained in the Gatco Chemfaram’s case (and which was the subject of comment by Brobbey JA (as he then was), there does not appear to be any justification for such a large amount, one that exceeds the claim. Nor should the security for costs have been ordered in foreign currency instead of the local currency: Ghana Cedis, when the matter was to be prosecuted in this jurisdiction and the expenses would be made locally. This is because costs, awarded to defray a party’s expense in the suit, (in contradistinction to damages which may be awarded in foreign currency, see: Royal Dutch Airlines (KLM) v. Farmex Ltd [1989-90]] 1 GLR 46), must be awarded in local currency to take care of expenses.

 

We are therefore inclined to uphold the arguments of the plaintiff on Grounds a, b, and d.

 

The plaintiff has complained that the grant of the application and the terms thereof sinned against the Wednesbury principle. We will be quick to say that the said principle is only applicable in judicial review cases where a public authority or body has been accused of acting unreasonably. In the case that gave rise to this principle: Associated Provincial Picture Houses Ltd. v Wednesbury Corporation [1948] 1 KB 223,the unsuccessful challenge by the plaintiff of a condition contained in a licence issued by the Wednesbury Corporation prohibiting the attendance of persons under fifteen years old whether accompanied by an adult or not on Sundays, required an answer to three questions posed by the court the third of which, known as the Wednesbury principle, was whether or not, the Corporation’s decision was so unreasonable that no reasonable authority would ever consider imposing it.

 

Although in the instant matter, the plaintiff/appellant may have found similarities between the Wednesbury principle and its complaint regarding the ruling of the learned trial judge, having resort to same, not in an application for judicial review, but in an appeal from the decision of the court below, is improper, and must thus be discountenanced.

 

The plaintiff complains lastly that the ruling is against the weight of the evidence. Such a complaint (it is long settled), invokes our jurisdiction in accordance with Rule 8(1) of the Court of Appeal Rules CI 19, to rehear the matter and come to our own conclusion, see: Oppong Kofi and Ors v. Attibrukusu III [2011] 1 SCGLR 176.

 

It seems to us, being engaged in this exercise, that notwithstanding the obvious mistake made by the learned trial judge when he concerned himself with the irrelevant matter of the defendant’s counterclaim, he also asserted that he was not satisfied with what had been put forward as assets within the jurisdiction. Neither are we, for the assets are not immovable, and we are not satisfied that receivables due to the plaintiff from customers in 2016 as shown in the invoices exhibited, will be paid and available within the jurisdiction at the time the suit will be determined. That singular consideration of the learned trial judge with which we are in agreement, coupled with the matter of the plaintiff’s non-resident status, persuades us that the order for the payment of security for costs cannot be faulted.

 

However, as aforesaid, the amount cannot be justified, nor can the matter of security in foreign currency be made to stand.

 

In consequence, while we uphold grounds a. b and d, we are disinclined to set aside the order for the payment of security for costs.

 

In the place of the original sum of USD400, 000 ordered, we substitute the sum of GHC 200,000.

 

The appeal therefore succeeds in part and is accordingly allowed in part.

 

No order as to costs.

 

 

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