ACCRA - A.D 2017

DATE:  1ST JUNE, 2017
CIVIL APPEAL NO:  H1/216/2015


In this appeal against the judgment of the High Court, Accra, dated 12th November 2012, the plaintiff/appellants (referred to hereafter as the plaintiffs), pray this court for an order setting aside the judgment of the High Court and thereafter, entry for judgment in their favour.


These are the matters that have given rise to the present appeal.


The first plaintiff is a Ghanaian ordinarily resident in Japan. The second plaintiff is his lawful representative in Ghana.


Sometime in 2006, the said representative (who is second plaintiff/appellant herein), having received information that the second defendant/respondent (referred to as the second defendant) had land to sell, went to see him at his office at Osu. The second defendant was at that time working as the Deputy Managing Director of the first defendant/respondent (referred to alternately as the first defendant, or the respondent), an asbestos manufacturing company, whose Managing Director had left Ghana for Lebanon in the turbulent times in Ghana referred to commonly as “the revolutionary days”.


In pursuance of the first plaintiff’s desire to acquire land to put up a hotel, the second plaintiff acting on behalf of the first plaintiff, entered into an agreement with the first defendant through its representative and Deputy Managing Director, the second defendant -reputed to be in charge of the company at the material time. The land the subject of this inquiry and subsequent agreement, was acquired in 1977 by Kataneh Ltd, the predecessor in title to the first defendant: Cemonit Ltd. The agreement which was reached and recorded in a document described as a Memorandum of Understanding (referred to hereafter as the MOU), was entered into when the second plaintiff and his lawyer met with the second defendant as well as the accountant of the first defendant, in the offices of the first defendant.


It was the case of the plaintiffs that the agreement for the sale of land described as containing an approximate area of 6.8 acres, situate at South Labadi, Accra registered at the Lands Registry as No.4310/1977 was entered into there.


It was recorded in the MOU - which was said to contain the entire agreement between the parties, that the first defendant, acting by the second defendant had in consideration of the sum of USD350, 000, agreed to sell the land described therein to the first plaintiff. Payment therefor was to be effected in the following manner: USD100,000 was to be paid immediately upon the signing of the agreement. Another tranche of USD100, 000 was to be paid after the first plaintiff had cleared the land of squatters and delivered up vacant possession to the first plaintiff. The last tranche of USD150, 000 was to be paid upon the execution of a Deed of Assignment by the first defendant acting by the second defendant, to the first plaintiff acting by the second plaintiff.


The MOU also set out the following as the circumstances under which it could be terminated:

“i. The Assignee defaults in payment of balance of purchase price on the completion date;

ii. The other party commits a breach of its/his obligations under this Memorandum of Understanding and in a case of breach being remedied, such remedy is not effected within three (3) months of that party being specifically required to do so;

iii. The other party ceases to be empowered to perform its obligation under this Memorandum of Understanding.”(my emphasis).


This was followed by a paragraph designated “Effect of termination” in the following terms:

“i. In the case of Assignor, the Assignee shall either recover the deposit together with interest at the prevailing Commercial Bank rate in USA and without prejudice to seeking redress from any suitable forum;


In the case of Assignee, he shall recover only his deposit and the Assignor shall be entitled to rescind the agreement and without prejudice to resorting to any suitable from of redress”.


Following the signing of the MOU, the second plaintiff paid the first tranche of USD100, 000.


It is our view that the contents of the MOU belied its designation, for the MOU (ordinarily the record of a mere gentleman’s agreement), encapsulated in the instant matter, the entire agreement of the parties; and the purchase price was not only stated therein, but monies were paid under it. In our judgment, that madethe MOU the contract for sale under which money was paid.


After the first tranche was paid, the plaintiffs waited for the defendants to deliver up vacant possession to them. That promise by the defendants, contained in the MOU, was easier made than fulfilled. The clearing of the squatters became so difficult that the defendants had to resort to a court action. The plaintiffs, desirous of the completion of the agreement, tried to assist in the enterprise by contributing money towards the prosecution of the first plaintiff’s claimagainst the trespassers. The matter is yet pending at the Circuit Court, Accra.


The plaintiffs having waited for what they considered an inordinately long period for the completion of the sale agreement, commenced an action at the court below seeking a number of reliefs some of which were incongruous in many respects for the following reasons:


The plaintiffs sought declaratory reliefs regarding the enforceability of the agreement for sale under which the USD100, 000 had been paid to the defendants; furthermore, that the performance of the contract rested with the defendants and lastly, that the communicated decision of the children of the deceased Managing Director intended to avoid the contract amounted to a breach of the contract entitling the plaintiffs to damages. The plaintiffs then made a claim for the return of the USD100, 000 paid under the agreement, as well as a claim in thealternative, for a declaration of title to the land the subject of the uncompleted sale agreement was made. A claim for general damages for breach of contract was also made, as well as a claim for interest on the sum of USD 115,000 made up of the said USD100, 000 as well as USD 15,000 allegedly paid by the plaintiffs as professional fees following the alleged breach of contract. The plaintiff also, per an amendment sought and granted, sought further reliefs for specific performance to enforce the MOU, an order to compel the first defendant to convey the land in dispute to the plaintiffs,and/or a further order compelling the Chief Registrar of the High Court to perform the said task of conveying the land to the first plaintiff per Conveyance or Deed of Assignment.


The learned trial judge heard the evidence of the second plaintiff who gave evidence for himself and the first plaintiff, and adjourned the matter for judgment when the defendants repeatedly failed to cross-examine the second plaintiff on his evidence. Before the judgment could be read however, the defendants by an application to the court, arrested the reading of the judgment and sought to reopen the case for cross-examination. After a period of upwards of three years, the defendants per counsel finally cross-examined the second plaintiff on his evidence and thereafter declined to offer any evidence. The defendants also paid the amount of USD100,000 into court in purported satisfaction of the claim. The plaintiffs refused to collect the money paid into court and rather,following the plaintiffs’ new claims for inter alia, specific performance of the contract,also paid into court, the amount outstanding on the contract for sale: the sum of USD250,000. Judgment was delivered after the cross-examination of the second plaintiff was carried out. The learned trial judge who had regard to the evidence led, in complete disregard of most of the issues set out at the Application for Directions stage, honed in on the claim for the return of the said USD100, 000 and held that it was in consonance with the termination clause stated in the MOU which entitled the defendants if they were unable to fulfil their obligation to complete the contract, to return the USD100, 000 paid. The learned judge then discountenanced every other relief sought except the payment with interest of the sum of GHC1, 500 which the plaintiffs advanced to the defendants to aid the latter’ssuit against the squatters.


It is against the said judgment of the court a quo that the present appeal has been brought. The appellants filed six grounds of appeal which we reproduce as follows:

a. That the honourable court erred when it failed to evaluate the evidence adduced before it and further failed to resolve facts in issue and also failed to assign reasons for accepting one version of the evidence against the other and the decision of the court must be set aside for not being satisfactory;

b. That the honourable court erred when it failed to appreciate that there had been a breach of contract on the part of the defendants/ respondents on account of non-fulfilment of their obligations under the written Memorandum of Understanding and they had to be mulcted in damages since the breach had occasioned harm for which the plaintiff/appellants needed to be compensated in damages.

c. That the honourable court erred when it failed to take into account an earlier ruling by the same court that the plaintiff/appellants had refused or rejected the monies refundedinto court by the defendants/respondents;

d. That the honourable court erred when it failed to take into account the fact that the defendants/respondents refused to open their defence and be cross-examined even though they had cross-examinedplaintiffs/ appellants the honourable court gave them the opportunity to do so;

e. That the honourable court erred when it failed to take into account the fact that the court had already given earlier decisions and orders in matters which were canvassed before it and thereby contradicted the decision of an earlier judge who sat on the matter when it was not exercising appellate jurisdiction;

f. That the judgment of the honourable court was against the weight of the evidence adduced before it.


We hold the view that some of the grounds of appeal were improperly set out as they sin against some provisions of Rule 8 of the Court of Appeal Rules CI19. We find that the first ground, inelegant for its prolixity, can simply be subsumed under the last ground, as the said ground is essentially a complaint about the evaluation of evidence. We make the order accordingly.We also find that thepenultimate ground (Ground (e)), sins against both Rules 8(2) and 8 (4 )of CI 19 for being argumentative as well as vague. The said ground is in any event one too many, as it is in substance the same as Ground (c). We therefore strike Ground (e) out as incompetent.


This leaves us with four grounds of appeal: Grounds b, c, d, and f.


We will first concern ourselves with the last Ground (f), omnibus in nature because a complaint couched in such terms invokes the jurisdiction of this court to look at the totality of the evidence led, evaluate same, and come up with its own conclusions as to the findings of the trial court, see: Oppong Kofi and Ors v. Attibrukusu III [2011] 1 SCGLR 176, also: Djin v. Musa Baako [2007-2008 SCGLR 686]; see also: Rule 8(1) of the Court of Appeal Rules CI 19.


Is the judgment againstthe weight of the evidence? The judgment of the court a quo acknowledged that the defendants failed to deliver up vacant possession of the land the subject of the agreement for sale contained in the document described as the MOU. The learned High Court judge was of the view that the MOU provided for the recovery of the deposit of USD 100,000 if certain circumstances occurred that negatively affected the performance of either party’s obligations. She was thus of the view that once the defendants who failed to perform their obligation of delivering up vacant possession had paid same into court, the terms of the MOU had been fulfilled, hence her finding that the plaintiffs were entitled to the said sum, as well as GHC1500 paid by them to aid in the prosecution of the defendants’ case against the squatters on the land in dispute.


The authorities are clear, that this court in the exercise of its appellate jurisdiction, must be slow to overturn findings of fact made by the trial court which had the exclusive right to make primary findings of fact, see: Agyenim-Boateng v Ofori and Yeboah [2010] SCGLR 861.


In our consideration of the evidence adduced, while we find the reasoning of the learned trial judge some whats implistic, we find that she was in fact not altogether in error, and her conclusion that the remedy due the plaintiffs had been prescribed under the paragraph of “Termination” in the MOU, is supportable, given the peculiar facts of this case.


We describe the learned trial judge’s handling of this case as somewhat simplistic, because the issues raised by the parties at the Application for Directions stage appeared to have been shunted aside in her consideration of the pertinent issues raised by the instant case, and no mention or pronouncement was made upon them at all even though they were agreed upon as the issues to guide the course of the trial.


It seems to us that long-windedand cumbersome though the said issues appeared to be, they touched on two main issues: whether or not the children of the deceased Managing Director were entitled to avoid the contract on the ground that it was never authorized by their father who had been in exile in there was no resolution of the company; andwhetheror not upon the payment of the deposit of USD100,000 the plaintiffs had sufficiently part-performed the agreement such as would entitle them to a decree of specific performance.


These issues as we have observed before now did not appear to have featured in the reasoning of the learned trial judge at all, nor were they the subject of specific complaint in the instant appeal. However, in the carrying out of our duty of rehearing, see: Rule 8(1) of CI 19 (supra), we go ahead to consider them, and to determine whether they ought to have exercised the learned trial judge in her judgment.


Had the case involved astraightforward contract for sale of land, we would have had no hesitation to say with regard to the first of the two issues we have adverted to, that the children of the deceased Managing Directory could not avoid the contract for the reason stated for the simple reason that the trite “indoor management rule” of company law dictated that a stranger to a company who had dealings with a company, was not expected to be privy to its internal affairs, see:S. 140 (1)(b) of the Companies Act 1963 Act 179;


“140. Acts of officers or agents

(1) Except as provided in section 139, the acts of an officer or agent of a company are not the acts of the company, unless,

(b) the company, acting under paragraph (a) has represented the officer or agent as having its authority to act in the matter, in which event the company shall be civilly liable to a person who has entered into the transaction in reliance on that representation, unless that person had actual knowledge that the officer or agent did not have authority or unless, having regard to the position with, or relationship to, the company, that person ought to have known of the absence of authority”, see also: Royal British Bank v Turquand (1856) 6 E&B 327 (Exchequer Chamber).


For this reason,persons such as the plaintiffs dealing with a company, were entitled to assume, in the absence of any matter that should place them on inquiry, that internal management procedures had been duly adhered to. The second defendant’s complimentary card,tendered as exhibit B, designated him Managing Director of the first defendant. In the MOU, he wasrecorded to have acted on behalf of the first defendantcompany. Furthermore, the second plaintiff testified that the transaction was entered into in the second defendant’s office at the first defendant’spremises, and that in fact the deposit of the purchase price was handed over to the accountant of the first defendant. That should suffice for apparent authority of the officer of a company under the “indoor management rule”. The plaintiffs were entitled to assume regularity, and the first defendantis not entitled to say otherwise.Thus, the act of the second defendant who as Deputy Managing Director (the capacity in which he executed the MOU), represented the first defendant in the transaction, would bind the first defendant company even if he lacked the requisite authority to transact that particular business.


Our answer to the second issue would be: the parties entered into an agreement for sale of land for the purchase price of USD350, 000, USD100, 000 of which was paid to the first defendant through the second defendant. A formal conveyance was never executed because the full amount was neverpaid. The full amount could not be paid, not due to any fault on the part of the purchaser (first plaintiff), but because the vendor (first defendant), failed to perform its obligation of delivering up vacant possession to the first plaintiff. For this reason, in the absence of a formal conveyance, applying the doctrine of part performance of an oral contract, (albeit this agreement was written even if there was no proper conveyance), the purchaser would ordinarily have been entitled to specific performance of the contract of sale, see: Walsh v Lonsdale (1882) 21 Ch D 9.


But the instant matter was not the ordinary case. The distinguishing feature of this contract was that the parties set out in the MOU, termination clauses (supra). In thetermination provisions, circumstances that would be considered a termination, permitting the other party to rescind the contract, were set out along with the consequences of such circumstances.


We therefore agree with the finding of the learned trial judge that the circumstances of this case fall squarely within Clause (iii) of the Termination clause: “iii. The other party ceases to be empowered to perform its obligation under this Memorandum of Understanding.” This is because in casu, the defendants, whose obligation it was to deliver up vacant possession had ran into difficulties,including that another party: the Osu stool which had become involved in this business of removing squatters, had, according to the second plaintiff, made an unreasonable claim for two billion old Ghana Cedis, which having been rejected, had resulted in the aborting of whatever assistance that party could have given the defendants. The defendants had in consequence commenced an action against the squatters which suit, the plaintiffs by their act of bringing suit against the defendants at the court below, indicated, that they had no expectation that it would empower the first defendant to deliver up vacant possession to them.


We have no disagreement with the learned trial judge’s order for the payment of the deposit of USD100,000as well as the award of interest upon the deposit of USD100,000 according to what the parties agreed on which was: “interest at the prevailing Commercial Bank rate in USA”.


It is our view that as the parties set out the consequences of failure to perform an obligation on either side, it was not open to either party to go outside the agreement to seek what could have been open to them on the application of principles of equity: a claim for specific performance which the appellants introduced at the court below.


But as the Termination clauses provided, the redress provided therein did not exclude any other cause of action open to the parties. It is for this reason that while we do not find any error in the reasoning or the conclusion of the learned trial judge regarding the refund of the deposit rather than a decree of specific performance, we find that her failure to explore whether there had been a breach of the contract between the parties entitling the plaintiffs to damages was erroneous, an abdication of her duty. We therefore proceed to concern ourselves with the appellant’s complaints against specific (non) findings of the learned trial judge.


Was the learned trial judge in error when she failed to hold the defendants/respondents in breach of contract between the parties? In our view she was.


Under the MOU, the first defendant acting by the second defendant,promised to deliver up vacant possession to the defendants “within a reasonable time after the execution” of the MOU, and made the payment of the second tranche of the purchase price conditional upon the fulfilment of that obligation. The second plaintiff, giving evidence for both plaintiffs in his sworn testimony before the court, averred that the understanding reached was that vacant possession would be delivered within two weeks. Although this was not set down in the MOU, he was not cross-examined on this assertion. The effect is that it stands uncontroverted. But whether two weeks,(or an indeterminate time in the future), it iscommon causethat the defendants were unable to deliver up vacant possession from the time of the signing of the MOU in 2006 until the instant suit was commenced by the plaintiffs in 2008 – a period of two years.


The respondents have argued that the contract was frustrated, and they citea number of factors allegedly responsible for this. First, is their reliance on their difficulty to evict the squatters (such that they have had to go to court for the purpose), second, is their assertion that the failure of the completion of the contract is due to the impatience of the appellants who, knowing of the court suit commenced by the respondents to evict the trespassers, felt the process was taking too long.


And indeed a successful application of the doctrine of frustration, would relieve the defendants of their assumed obligation without the fault that inheres in a breach of contract. But frustration generally occurs when an event that could not be foreseen by the parties, occurs after contract, for the parties in entering into that contract have in their contemplation the continuance of a certain state of affairs. This state of affairs if disrupted may make performance impossible, and the contractor may be excused as the lack of performance was not the result of his default, see: per Blackburn J in Taylor v Caldwell (1863) Q.B 3 B&S 826.In the instant matter, the presence of the squatters on the land was known to the parties at the time of contract, and though there has been considerable difficulty in the defendants’ efforts to evict the squatters (including their resort to a court action to the knowledge of the plaintiffs), it cannot be said that there has been a supervening event that has made the contract incapable of performance.


Nor is it reasonable to require or expect the plaintiffs to forgo any redress available to them because there may exist some hope that at some point in the future, the defendants through the courts, would be empowered to deliver up vacant possession to them. There is no gainsaying that if after two years of an agreement under which a considerable amount of money had been paid, completion could not be effected because of squatters whose presence on the disputed land was no secret to either party at the time of contract, the decision of the plaintiffs to seek redress was not unreasonable, and cannot be the basis of a finding that the contract was frustrated as canvassed by the first defendant. We find that two years with no end in sight, was an inordinately long period to wait for vacant possession following which the monies outstanding on the contract of sale could be paid. The long delay in performance of the defendants’ obligation for whatever reason, was clearly not, on the acknowledgment of both parties, what the parties had in their contemplation at the time of contract regarding the completion thereof when they used the expression “a reasonable time”. For this reason, the defendants who made a promise in the MOU to deliver up vacant possession within a reasonable time were clearly in breach of the agreement for the sale of the land. Thus, the learned trial judge was in error when she failed to advert her mind to these matters and to find that the defendants breached the contract between the parties.


We hold that the defendants were in clear breach of the agreement for sale, the consequence of which is the award of damages against them. The plaintiffs are thus entitled to damages in addition to the return of deposit with interest provided for under the MOU, but not, as we have already stated forcefully, a decree of specific performance.


With regard to the complaint contained in ground (c), we find that there is no merit in it. We note that there were at least three rulings upon interlocutory applications that were given in the course of the trial. The only ruling that made reference to the sum of USD100, 000 paid by the respondents into court in purported satisfaction of the plaintiffs’ claim which was rejected by the plaintiffs, was upon an application seeking an amendment of the reliefs to include a claim for specific performance et al. There is no reason why the learned trial judge ought to have been swayed by any of these rulings in her judgment. The duty of the learned trial judge in delivering judgment was to evaluate the evidence led before her, and to give judgment based on the evidence as led upon the pleadings, see: Quaye v Mariamu[1961] 1 GLR 93, granting relief as sought upon the writ of summons and statement of claim. She was not to be swayed by extraneous matters, including interlocutory matters, the purpose of most of which was to hold the balance evenly between the parties until the matter was determined one way or the other, see: Odonkor and Ors v. Amartei [1987-88] 1 GLR 578.


The last relief (d) complains that the failure of the defendants to give evidence should be held to be fatal. We are not persuaded by this argument.


Since the case was fought on pleadings, the first defendant who filed a pleading had a right to cross-examine the plaintiffs on what they had asserted, with a view to discrediting the case of the latter. If having done so, they were of the view at the close of the plaintiff’s case that they had no need to call evidence in support of the defendants’ case, they could (as they did in the instant case) adopt a course, recognised in the rules of court, not to adduce evidence, see: Order 36 R4 High Court (Civil Procedure) Rules 2004, CI 47. While that course may be perilous to the defendants, it is not, as canvassed by the plaintiffs, necessarily fatal, nor does it entitle the plaintiff automatically to judgment.


In a civil trial, the plaintiff bears the burden to establish what he asserts on the preponderance of the probabilities, see: S. 12 of the Evidence Act NRCD 323.The burden of proof, which includes the burden of persuasion, is his obligation to establish a requisite degree of belief regarding what he asserts in accordance with S. 10 thereof, and of producing evidence which requires him to introduce sufficient evidence to avoid a ruling on the issue against him in accordance with Ss. 11 (1) and (4). Thus, at the close of his case, he must have made a case which establishes a requisite degree of belief regarding what he asserts. It is only then that the defendant would be obligated to adduce sufficient evidence on the transaction which was essential to his defence, see:14 of NRCD 323.The defendant’s burden at that point would be to introduce what may negate the probability of the plaintiff’s case so that the case is either evenly balanced, or tilts in favour of the defendant. If the plaintiff was unable to meet his burden of introducing sufficient evidence in proof of what he asserted, he would failing his case.


In the instant matter, the learned trial judge went through the pleadings and the evidence and was not satisfied that the plaintiffs’ claim, as endorsed on the writ of summons,was not made out in the face of the provisions on termination set out in the MOU. Thus, having found what she deemed to be a weakness in the plaintiffs’ case, she failed to enter judgment in their favour. We find no error in it although as we have said, her failure to award damages was erroneous.


Having found the plaintiff entitled to compensation by way of general damages, we have regard to the totality of the evidence and hold that the sum of GHC50, 000 will be fair and adequate compensation for the breach of contract. In awarding this we have regard to the inconvenience caused by the defendants’ inability to perform their obligation of delivering up vacant possession, the cost to the first plaintiff who has had to come to Ghana from Japan where he is ordinarily resident on more than one occasion to pursue the sale, as well as the monies spent in engaging counsel to seek redress.


We confirm the order of the learned trial judge that interest must be paid on the USD100, 000 at the rate specified in the MOU: the Commercial Bank rate in the USA, from the date of the MOU: 25th August 2006, until the date the money was paid into court.


The appeal therefore succeeds in part.


Costs of GH¢20,000.00 in favour of the Appellants.





GYAESAYOR, J. A.                            I agree            PAUL K. GYAESAYOR

                                                                                  (JUSTICE OF THE APPEAL COURT)


LARBI, J. A.                                        I also agree     IRENE C. LARBI (MRS.)

                                                                                  (JUSTICE OF THE APPEAL COURT)