IN THE SUPERIOR COURT OF JUDICATURE
IN THE COURT OF APPEAL
KUMASI - A.D 2017
KUMASI METROPOLITAN ASSEMBLY AND WASTE MANAGEMENT - (Defendant/Appellant)
MESSRS FREKO FD ENTERPRISE LTD - (Plaintiff/ Respondent)
DATE: 23RD MAY, 2017
CIVIL APPEAL NO: H1/82/2016
JUDGES: AYEBI J.A. (PRESIDING), TORKORNOO (MRS) J. A., DOMAKYAAREH (MRS) J. A.
COUNSEL FOR DEFENDANT/APPELLANT - VALANTINE BOAMAH
COUNSEL FOR PLAINTIFF/ RESPONDENT-ADOMAKO KWAKYE WITH SHADRACK YEBOAH OBENG
TORKORNOO (MRS), J.A.
The Defendant/Appellant Assembly entered into an agreement with the Plaintiff/Respondent Company to build, operate and transfer 20-seater, water closet facilities at 61 sites in the city of Kumasi. The agreement was first signed in 2000, accepted as repudiated in March 2004 and renewed with amendments in November 2004.
In paragraph 10 (13) of its Amended Statement of Claim, the Respondent averred that it ‘…duly commenced the building of the said toilet facilities at the following 61 sites selected by the defendant’ and went on to name the sites. However, in paragraph 15 of the Amended Statement of Claim, it gave details of only 16 facilities it had completed and operated at the time of commencing the action in 2012. Then in paragraph 20, it set out four other facilities that had been completed but were not operational and fifteen facilities that had been started but were uncompleted, thereby presenting that it actually executed building works on only 35 out of the 61 sites
Its Managing Director and representative called Mrs. Freda Darko led evidence in support of Respondent’s case, stating that the Respondent had constructed the 16 toilet facilities on 13 of the sanitary sites because 3 sites had been found large enough to accommodate 2 toilet facilities. The list and pictures of the 16 sites can be found in Exhibit G series on pages 1001-1017 of the Record of Appeal. The Respondent’s explanation for the inability to complete construction on all 61 sites between 2000 and 2012 when it commenced the action was that the Appellant acted in breach of various contractual provisions and through that, repudiated the agreement. These acts were listed in extensor in paragraph 13 of its Amended Statement of Claim. Consequently, the Respondent sued the Appellant for various heads of damages and claimed
a. Judgment for GH¢32,787,363.84 damages being 10 year profit or a return on capital investment due to Plaintiff from the 1st defendant upon breach of agreement.
b. Special damages of GH¢2,289,031.45, being balance of unrecovered cost of the investment made by the Plaintiff for the 10-year period beginning 1st August 2012.
c. Interest on the sum GH¢2,289,031.45 from 1st August 2012 at Treasury Bill rate till final payment.
d. Recovery of lost profit in the sum of GH¢8,243,200.00 on account of the 1st defendant’s breach of the agreement by disabling the Plaintiff from constructing stores as a fence wall.
e. Payment to Plaintiff the current value of items set out under paragraph 31 of the Statement of Claim as having been lost through acts of the 1st defendant and its agents.
f. General damages for frustration, interference with contract, inconvenience, expectation of interest, mental distress, physical inconvenience, etc.
g. Further reliefs.
The Appellant contested the allegations of breaches and claims for damages. It averred that although the project sites were specified in the agreement, the Respondent worked at unauthorized sites to the neglect of some of the authorized sites. The Appellant also contended that the Respondent’s action was premature, because the parties were bound by an arbitration agreement. Appellant counterclaimed for:
Declaration of title to and recovery of possession of all sites and locations designated as sanitary sites which the Respondent had failed/refused to complete construction on as agreed.
Compensation for breach of contract.
Any other reliefs deemed fit by the court.
At the end of the trial, the learned trial judge agreed with the Respondent on most of its’ complaints and awarded its’ claims for:
GH¢32,787,363.84 damages as 10-year contractual profit or a return on capital investment due to the Plaintiff.
Special damages of GH¢2,215,102.57, being unrecovered cost of the investment made by the Plaintiff with interest at the prevailing bank rate from 1st August 2012 to date of payment.
Recovery of GH¢ 8,243,200.00 as lost profit on account of the 1st defendant’s breach in disabling the Plaintiff from constructing the stores fence wall.
GH¢ 18,000.00 being the value of materials lost or destroyed by actions of officers and agents of first defendant on site.
Costs assessed as 10% of the total liability in the awards
The Appellant has appealed on 2 grounds. That:
The learned Judge erred when he failed to consider fully the evidence of the parties on record.
The judgment is against the weight of evidence.
Appellant counsel indicated that he had ‘merged’ the two grounds of appeal for the purposes of his submissions. Because Appellant has urged that the judgment is against the weight of evidence, the onus is placed on Appellant counsel to point to which pieces of evidence that the court applied against the Appellant which should have been differently construed, and which pieces of evidence were construed in favor of the Respondent, but which should have been applied against it.
This is the position of the law as stated in cases such as Djin v Musah Baako 2007-2008 SCGLR 687 where the Supreme Court held as the first holding that ‘where an Appellant complains that a judgment is against the weight of evidence he is implying that there were certain pieces of evidence on the record which, if applied in his favor, could have changed the decision in his favor, or certain pieces of evidence have been wrongly applied against him. The onus is on such an Appellant to clearly and properly demonstrate to the appellate court the lapses in the judgment being appealed against’
Again, Rule 8 (1) of the Court of Appeal Rules 1997 CI 19 directs that every appeal must be conducted as a rehearing. This rehearing is done within the precincts of the grounds of appeal presented in the notice of appeal. As rightly submitted by counsel for Appellant, the ‘appellate court is placed in the same position as the trial court to critically examine the whole record and evaluate the whole of the evidence given at the trial so as to come to its own conclusions and findings’. He cited the following cases Praka v Ketewa 1964 GLR 423 and Fosua v Adu Poku 2009 (Deceased) & Adu- Poku Mensah 2009 SC GLR 310.
Thus, while considering the submissions of counsels, we also carry a duty to examine the evidence before the court and determine whether the judgment is against the weight of evidence and whether the learned judge failed to fully consider the evidence placed before him and thereby erred in his judgment.
As pointed out by counsel for Respondents, the submissions of counsel for Appellant were significantly scanty. It was his submission that the finding by the learned judge that the Respondent had proved that the Assembly was in breach of its duties under the contract was against the weight of the evidence. This is because the Respondent was adamant in its position that under the contract, any act purporting to emanate from the Assembly ought to have been executed by the Chief Executive. This was supported by the testimony of its Mrs. Darko and Exhibits such as Exhibit S, written to point out that the direction of an administrator of a sub-metropolitan council could not be recognized as an act of the Assembly. Thus alleging that acts such as burning rubbish etc. by persons alleged to be connected to the Assembly were acts of default of the Assembly, amounted to ‘approbating and reprobating’. This was in essence, the sum total of Appellant counsel’s submissions on how the judgment was against the weight of evidence.
Regarding how the learned judge erred in failing to fully consider the evidence, he pointed to the Appellant’s counterclaim for recovery of possession of the sites. He submitted that the judgment granted the Respondent all it would have earned for the entire period of the contract, by its calculations. It was his submission that having given the Respondent ‘all the profit it would have gotten from her operation of the facilities as though the contract had run to its full tenure’, the judgment refusing recovery of possession also allowed her to retain all the 61 sites, and this was wrong.
We have considered these submissions and find them relevant. However, they do not in any measure do justice to the extremely important and significant ways in which the judgment is against the weight of evidence and how the learned trial court erred by not construing certain evidence against the Respondent. Thus, while upholding Appellant counsel’s submissions, we also as a function of rehearing, place on record our reasons for upholding the appeal on the grounds of appeal. Indeed, we must express our extreme disappointment in how counsel for the Assembly did not apply industry in addressing the extremely substantial legal imports of the evidence and judgment that this case called for. And especially because the debt occasioned by the judgment is not a meager sum, though not justified. It is in the same tenor that the trial judge roundly rebuked the attitude of the Appellants at the trial. The overall impression given by the staff and counsel of the Appellant Assembly is that of people who were not attached to the excellent discharge of the heavy obligation placed on them by their duties.
We see that the evidence before the court, and the judgment given based on the evidence, reveal a failure by the honorable court to appreciate the import of the contract the parties entered into, and the duties of the Respondent under the contract, which made her claims about breach, repudiation and for damages untenable. With regard to the complaints regarding breaches by the Assembly, the court failed to apply the relevant law in some of those complaints, which should have been the law of torts. Regarding other alleged breaches, the court failed to apply the relevant doctrines in contract, which should have led to a dismissal of the complaints of breaches by the Appellant.
Thirdly, the calculations of the values of the buildings and alleged profits adjudged as damages do not in any way conform to the principles that guide the law on damages. Fourthly, as argued by Appellant counsel, the evidence totally stood at variance with the judgment refusing recovery of possession. Finally, we must also say that the courts in Ghana are courts of equity, and so at any time, the courts must keep equitable doctrines in focus when evaluating legal arguments. Where the acts of a complaining party are themselves manifestly unjust, a court is under a duty to carefully examine the import of those actions in the law of equity. It would seem that the prior breaches of the Respondent, and the necessity of seeking guidance from the law of equity when evaluating the breaches of the Respondent, who was the Plaintiff, escaped the learned trial judge
As agreed by the parties, and amply supported by the text of clauses of Exhibits A and B, the contract was for a build, operate and transfer project. This created three major obligations for the Respondent. To build in accordance with the set program, to operate the facilities according to the contract, and to transfer the operation and possession of the facilities to the Appellant at the end of the operation period.
At every material time, it was clear that the Respondent was to construct the facilities in 61 sites over a six month period. The original contract, premised on Respondent’s own proposal, and Appellant’s acceptance, was that each facility would cost 100 million cedis or GH¢10,000 in today’s currency. A critical provision in the contract can be found in clause 4.6.1 of Exhibit A on sanctions (page 965 of the ROA). The Respondent was to pay an agreed sum as liquidated damages for each day that it delayed in the completion of the facilities as a debt to the Appellant. This figure was set at 10,000 cedis (or GH¢1) a day per facility in Annex 8.1A on page 982 of the Record of Appeal. This provision made the obligation to complete the facilities within the scheduled time critical, and made time of essence for the completion of the facilities
In Keating on Building Contracts, Sweet & Maxwell, 7th Edition 2001, the learned author has this to say about time and the incorporation of liquidated damages in contracts on pages 276 and 279.
‘If the contractor fails to comply with the terms of the contract as to time, he is in breach of contract and liable in damages and the employer may have express remedies under the contract.’ ‘Where there is a clause on liquidated damages and the contractor has failed to complete to time, he is prima facie liable to a claim for the liquidated damages either by way of action or by deduction. There can be no inquiry into the actual loss suffered’ (emphasis mine)
The concept of liquidated damages is utilized in building contracts to ensure that the losses to a client from delays in completion are reduced through reasonable pre-estimates inserted into the agreement. When delays occur therefore, the parties do not have to spend time calculating actual damages but simply apply the agreed rates of compensation.
In the November 2004 amended Agreement, another dimension was added to the duty of the Respondent in the construction phase in clause 4.1.7 found on page 993 with the statement ‘Upon completion of the toilet facility, the Investor shall assess the cost or market value of the toilet facility, which the Client shall agree’. Reading the original and amended contract documents together, the Respondent was to finish the facilities in six months or be deemed to be so in default that it would pay liquidated ascertained damages, and when it finished the construction, it would present the cost of the facility to the client for the client’s agreement.
After construction, the original contract fixed the operation and payback period. The Respondent would operate the facilities for 20 years after completion. The monthly pay back sum was 200,000 Cedis or GH¢20 (as offered by Respondent) per facility but was subject to revision (as finally agreed by the Appellant). These commitments can be found on pages 958, 960 and 982 of the Record of Appeal respectively. The payback figure was calculated to be approximately 25% of the estimated monthly income of 996,400 Cedis (or GH¢ 96.64) for each of the facilities – which would allow the Respondent to apply 75% of the income to recover the cost of the facility with interest and profit over the 20 year post building period. The Respondent gave the undertaking in its offer to start work as soon as ‘reasonably possible after receipt of the client’s notice to commence’.
The amendment to these commitments found on page 993 introduced the following changes
· the Respondent ‘shall’ operate the facility for six (6) months to ‘ascertain’ the average monthly proceeds of the facility, the cost of operation and the net income to the client . (emphasis mine) It is noteworthy that the six month post operation period was to ensure inter alia, that the net income to the client was ascertained. This made the obligation to pay the client the surcharge sum a significant term of the contract.
· the contract expiry period was to be determined by calculating the number of years of operation required to recoup the cost of the toilet facility plus ten years to enable the investor recover the cost and earn a profit. This meant that the original 20 year expiry period could be significantly reduced or increased depending on the returns on the facility in a location. It also meant that it was absolutely critical that the parties had the opportunity to determine what the recouping rate was for the Respondent, and the fair time to set for determining its operation for the facilities.
· commencing one month after certified completion of the facility, the investor ‘shall’ pay an agreed minimum monthly surcharge to the assembly. (emphasis mine)
Now what is clear is that the Respondent was never discharged from the obligation to complete the facilities over a six month building period. It was never discharged from presenting the actual cost of building the facility to the client immediately after construction. It was never discharged from the obligation to present accounts on the average monthly proceeds and cost of operation to the client. It was never discharged from the obligation to pay the monthly surcharge fee. And it was never discharged from paying liquidated damages of GH¢1 a day per facility for each day that it failed to complete a facility on time. The account it was required to present on the average monthly proceeds during the first six months of operation was necessary to ‘ascertain’ what was due to the client under their contract and what the contract period would be. The 2004 amendment did not also change the 25%:75% ratio sharing between the parties. What it did was confirm that the payment will be an ‘agreed minimum monthly surcharge’.
So if these were the important obligations of the Respondent as investor, as reiterated in paragraph 10 of the Statement of Claim, what evidence was brought in support of the performance of the parties regarding this agreement? And this is an absolutely important question because any court of equity called upon to enforce the benefits and terms of a contract must first satisfy itself that the Plaintiff is entitled to the orders by the cleanness of its own hands. A party to a contract cannot act as if it has been discharged from the execution of its own responsibilities and yet demand specific performance of the obligations of the other parties.
Secondly, by alleging repudiation of the contract by the Appellant as a basis for claiming damages amounting to full recovery of the benefits of the contract – and outlining the alleged acts of repudiation to have occurred over an incredible eight year period (between 2004 and 2012), it was the duty of the court examine the nature of the acts complained of, to determine if they so touched the fundamental obligations of the Appellant, as to allow the Respondent to treat itself as discharged from its obligations under the contract.
This is because even where breach of contract is proved, it is not any breach that amounts to repudiation, but a breach of a fundamental obligation or condition of the contract, which evinces an intention not to honor the contract. As stated on page 92 of Contract Law by Elliot and Quinn Longmann 1996, ‘Where a condition is breached, the innocent party is entitled to regard the contract as repudiated, and so need not render any further performance, and can also sue for damages’. (emphasis mine)
Repudiation is defined by Black’s Law Dictionary (8th ed) as “...2. A contracting party’s words or actions that indicate an intention not to perform the contract in the future; a threatened breach of contract. A repudiation is (a) a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach.... or (b) a voluntary affirmative act which renders the obligee unable or apparently unable to perform without such a breach.
In order to constitute a repudiation, a party’s language must be sufficiently positive to be reasonably interpreted to mean that the party will not or cannot perform. Mere expression of doubt as to his willingness or ability to perform is not enough to constitute a repudiation, although such an expression may give an obligee reasonable grounds to believe that the obligor will commit a serious breach and may ultimately result in a repudiation...”
In Social Security Bank Ltd v. CBAM Services Inc. [2007-2008] 2 SCGLR 894 the Supreme Court dealt with issues involving repudiation and affirmation of breach of a contract, without the explicit use of those words. In that case, the Respondents entered into an agreement with the Appellants, under which the Respondents were responsible inter alia for promotional programs and advertisement of Moneygram services which were being offered by the Appellant. The agreement required that the Respondents obtained prior written approval from the Appellants before putting out these advertisements and promotional programs. The Appellants reserved a right to terminate the agreement upon breach by the Respondents and subsequently exercised this right on the ground that the Respondent had failed to perform its obligations to obtain written approval for the advertisements.
The trial court found there had not been compliance with the requirement to seek prior written consent between 1996-99 and yet the Appellants had not written any letter to the Respondents in complaint. At the Supreme Court, the Court per Wood C.J at page 905 agreed with and cited from Ray Goodes Commercial Law (2nd ed) at pages 129-130 the factors allowing termination for breach as “the breach of an obligation in a contract will entitle the innocent party to treat the contract as discharged if (a) the act of breach signifies an intention on the part of the guilty party not to carry out the contract in some essential respect.; or (ii) the term broken is considered to be a condition such as to frustrate the commercial purposes of the contract or (iv) the contract empowers the innocent party to terminate it. “She said “a breach of fundamental or essential term is one of the grounds upon which a contract may be terminated”.
Her Ladyship went on to note that “it is trite learning that a waiver or forbearance may either be oral or written and may be inferred from the conduct of the party affected by the breach complained of.’ In that case, the Appellant’s silence in not communicating its protest was taken by the trial court to be a positive and intentional act, which was acted upon by the Respondent. It was also held that the Appellants request for a downward review of the Respondent’s commission to discharge the Respondent from its advertising obligations was conduct from which a waiver or the fact that the Appellant was not insisting on strict compliance could be inferred. The court reasoned that “the clearer evidence on insistence on full compliance would have been an immediate termination of the contract immediately those breaches occurred and not the back and forth discussions...” It was finally held that since the Appellants continued to carry on the business and enjoy the fruits, the fact that they had condoned the breaches could not realistically be questioned, and they could not later turn round to urge damages based on the breaches.
In Asiamah JSC’s opinion and found at pages 908 - 909 of the report, he stated that the motive of the parties in entering the contract was to reap good financial returns therefore in construing the contractual provisions which had allegedly been breached “ this court would no doubt be inclined to consider firstly the effect of the alleged breach on the economic fate of the contract, and secondly, the conduct of the parties, particularly the innocent party vis-a-vis the breach. Determination of a contract is such a serious matter that justice and equity demand that a court exercising jurisdiction in such matters must proceed with integrity, judicial circumspection and rectitude. The occurrence of an event in relation to a stipulation which would justify an innocent party to abrogate a contract must be of a kind that excludes a conduct in the defaulting party which discloses a deliberate intention to frustrate the actualization of the inducement which prompted the parties to embark on a particular activity. This must be the underpinning factor in considering whether non-performance of an obligation in a commercial contract can be said to have vitiated the reasonable expectations of the contracting parties in achieving their ultimate intentions and thereby lead to an outright repudiation or be regarded as a mere innocuous infraction. If the basis for the repudiation of a commercial contract like the one we are dealing with is the latter, justice of the exigencies of the circumstances of the case would not induce the court to support the threatened abrogation of the contract by the innocent party (emphasis mine).
A breach of an obligation in a contract that would of necessity call for an election on the part of the non-offending party to exercise his right of determination in the contract, must fit into any one of the following situations: (i) that which goes to the whole root of the contract and not just a part of it; or (ii) that which makes further performance impossible; or (iii) that which affects the very substance of the contract…..
However, if prima facie, there appears to be a breach in any one of these situations but the innocent party, with full knowledge of the facts makes it clear by words or acts, or even by silence, that he refuses to accept the breach as a discharge of the contract, the effect is that the status quo ante is preserved intact. The contract remains in being for the future on both sides. In such a situation, the law would regard the innocent party to have repudiated his obligation of exercising his right to abrogate the contract”.
In essence, a court has to do a critical examination of the conduct of the alleging party when considering claims of breaches which have led to repudiation. It is not enough to point to the alleged breaches of the ‘offending party’, without examining the materiality of the alleged breach, and the responses of the ‘innocent party’ – whether they affirmed the contract after the alleged breach or they acted timeously to terminate same.
So in Afrifa v Class-Peters 1975 1 GLR 359, Francois JA refused to find acts of repudiation amounting to discharge because he was not satisfied that there had been such a ‘fundamental aberration going to the root of the relationship and destroying it,’ to entitle the complaining the party to hold himself out as discharged from any further obligation, and claim the benefit of the unperformed contract. Repudiation was however upheld to have occurred Praah and Others v Anane 1964 GLR 458 where the offending party put up a building totally different from what they had contracted to do. The Supreme Court held that they had committed a breach which goes to the root of the contract and entitles the complaining party to claim the full value of the contract.
For an innocent party to be entitled to treat oneself as discharged by acts amounting to repudiation, and entitled to the benefit of the unperformed part of the contract, the complaining party must first show itself not to similarly be in breach of material conditions of the contract. In Comet Construction Co. Ltd. v Tema Development Corporation 1965 GLR 66 where the complaining party had taken 22 months to make construction site available, and yet sought to rely on a forfeiture clause to terminate a contract for late delivery of houses, the court held that position to be untenable. Where a party alleging breach of a condition continues to treat itself as bound by the contract after the alleged acts of repudiation, the principle of affirmation kicks in – removing the entitlement to discharge from the contract.
Affirmation is where an innocent party, fully aware of the facts amounting to breach, indicates with words, acts or even silence, an intention that the contract should continue despite the breach. As stated on page 195 of Elliot and Quinn cited supra, ‘the innocent party’s decision to affirm the contract is final; they cannot later decide to terminate for that breach’.
Black’s Law Dictionary (8th ed), defines the concept as “affirmance” in these words
“1. ratification, reacceptance, or confirmation. A party who has the power of avoidance may lose it by action that manifests a willingness to go on with the contract. Such action is known as affirmance and has the effect of ratifying the contract.... on ratification, the affirming party is bound as from the outset and the other party continues to be bound...3. The manifestation of a choice by someone with the power of avoidance to treat a voidable or unauthorised transaction as valid or authorised. 4. The manifestation of a choice, by one on whose behalf an unauthorised act has been performed, to treat the act as authorised.”
What we find striking in this case is that the evidence shows that this was not at all a proper case for a finding of repudiation for all the factors described above. First it is the Respondent who first fell into breaches of material terms of the contract and whose acts should have excited repudiation by the Appellant, and not the other way round. Second, in the structure of the contract, the alleged breaches of the Appellant could not be described as breaches because the Respondent had failed to discharge its prior duty of accounting for the building and operation of the new facilities, and these were the activities that were to kick off the duty to demolish the old toilets. Third, because the Respondent held itself out as having the money to first build the new facilities as an investor, the demolition of the old facilities were not material to the execution of the Respondent’s part of the contract, such as to entitle them to hold themselves discharged from their side of the contracts. Fourth, the failure of the Respondent to walk away from this contract from 2004 when it started the complaints of breach and their continued reaping from the contract notwithstanding the alleged breaches is only an indication of their affirmation of the contract. This should have led to a dismissal of their claims for damages.
The facts of the case show a total failure by the Respondent to discharge ALL (emphasis mine) of its own duties as undertaken under the contract. It failed in the duty of completing the construction of the toilets within 6 months as required by the 2000 contract and its 2004 amendment. The learned trial judge seemed to imagine that because these six months were not in a specific clause in the General Conditions of Contract (Exhibit A), they were less binding. However, the court ought to have taken judicial notice of the fact that building contracts incorporate letters and undertakings as special conditions with the general conditions and these are equally binding as part of the contract. He also referred to the defendant’s representative as testifying that the Respondent was shown the sites between 2000 and 2004. I have carefully perused this testimony and found no such testimony. I must roundly disagree that this evidence was part of the defendant’s testimony.
And I must also say that the Respondent was engaged as an investor and so a commitment to apply resources to build all the 61 toilet facilities was a fundamental condition and obligation on them and this had to implied into the contract. They had no business complaining about competition from the existing toilets as hampering their capacity to discharge their own obligations.
Then the Respondent also failed in the undertaking to present an account on actual costs of the built facility to the Appellant after construction of same. It failed in the duty to present an account on the income from the facilities after six months of operation for the parties to determine the reimbursement period plus 10 years for profits to the Respondent. And it failed in the undertaking to pay 25% of earnings or whatever figure was agreed to the Appellant. With this background, the court should not have acceded to its demands for damages in any material particular.
In both examination in chief found from page 709 of the ROA, and cross examination regarding why the Respondent failed to construct the facilities within the six month period found from pages 759 to 794, the Respondent’s representative’s testimony was that before the company could start working at the sites, the Kumasi Metropolitan Engineer (KME) ‘should lead us to the site and show us the site to determine the exact site suitable for the construction’.
But I think that this position is bereft of candor. First, because Respondent failed to present any evidence of being taken to any of the 35 sites it admits to developing fully or partially – to make the alleged site possession visits relevant in the scheme of things. Second, these sites were identified in the contract documents before the contract was signed. Third, the contract made clear that commencement was triggered by the issue of a commencement notice, and not a site visit.
Clause 4.1.4. of the General Conditions of contract and found on page 962 of the ROA, reads
4.1.4 Commencement Date
The date upon which the investor receives the notice to commence, as issued by the Client
There was no anticipation of commencement starting from site visits.
There was a noticeable attempt to seek corroboration of this ‘site visit commencement’ concept through the cross examination of Appellant’s representative. I do not think that these off-handed questions at all established this position that Respondent tried to project.
In cross examination found on page 820, the Appellant’s representative was asked
Q. First defendant was to show the Plaintiff a specific location to develop before work at site could commence construction?
A. Yes. That is why Plaintiff was taken round and handed over the sites
Q. you agree Plaintiff was not shown all the 61 sixty one sanitary sites in a day
A. I agree
Q. you agree it is when the Plaintiff is shown a specific site that the six month period of completion begins
Clearly this testimony did not urge that it took between 2000 and 2004 for the Respondent to be shown the sites. And these questions were not continued to establish exactly when the Respondent was shown those sites that she worked on – if the purpose of the query was to establish that it had discharged its side of the bargain to commence construction within six months of being shown sites. I think it served more of a red herring than having any useful effect.
Then there is the contradiction found in the pleadings. In paragraph 10 (13) of its Statement of Claim, it said ‘Pursuant to the said agreement, the Plaintiff duly commenced the building of the said toilet facilities at the following 61 sites selected by the 1st defendant….’
The only inference that a court could make from this pleading and lack of evidence of any site handing over record, or issue of commencement notice, is that the parties treated the start of the construction period as triggered by the fact of the contract itself, and nothing else.
In her testimony, the Respondent’s representative claimed that it could not construct on a certain site because the ground was soggy, and in another site because the ground was rocky, and they were depending on the Appellant’s officers to show them where to put the manholes for the toilets. However an examination of the contract document shows that the Appellant’s officers did not carry a duty to give technical advice to the Respondent who represented itself as able to construct the toilets on the sites. Indeed clause 4.10.5 of the contract directed that there was to be a complaint log and record which ‘shall’ be made by the investor and made available for inspection whenever requested by the Assembly or anyone it directs to monitor the work of the Respondent. The lack of this required complaint log rendered any complaint about site conditions or failure to be given site possession untenable. And if Mrs. Darko is to be believed, then Respondent constructed toiles without knowing where to put manholes - an unacceptable situation.
The Appellant complained in paragraph 7 of its Statement of Defence found on page 38 that the Respondent failed or refused to work at the specified areas in the contract and some of the areas it claimed to have commenced or completed construction on were never part of the agreement. The trial judge said this position was not supported by the evidence. I must disagree with him. This is because the list of sites was attached to the agreements and though no room was made for two facilities on one site, the Respondent pleaded that it built more than one facility on certain sites. I find from the record that there is no evidence that Respondent was restrained in its construction, or complained about constraints to its work in the first six months of the contract – when it should have gone on site and invested resources as required by the deal it got.
And yet, the evidence in the pleadings and testimony of the Respondent was that over the twelve year period that existed between the signing of the contract in May 2000 and commencement of the suit in December 2012, the Respondent only completed facilities on 20 sites, and according to paragraph 20 of its Statement of Claim, started construction on 15 other sites. It must be noted that these pleadings in paragraph 20 contradict that in paragraph 10 (13) where it claimed to have duly commenced the building of the toilet facilities at the 61 sites. And they also contradict two significant pieces of evidence – Exhibits P and T.
In Exhibit P found on page 1051, the Respondent’s solicitors Hayfron-Benjamin & Co wrote to the Appellant on 31st March 2004. The letter ends its paragraph 2 with these words ‘Our client has already invested substantial amount of money into the construction and completion of about forty such facilities most of which are already available for use by the public (emphasis mine) .
Exhibit T found on page 1056 is a letter written by Respondent itself to the Appellant herein and makes a similar claim in its paragraph 2 ‘It will be further recalled that relying on this BOT Agreement, Messrs Freko has invested substantial sums of money into the construction and completion of at least 40 such facilities most of which are already available for use by the public’
So apart from being confronted with a pot pourri of contradictions regarding how many sites the Respondent actually started work on, completed and was earning money from, what is clear is that right from the beginning of the contract, the Respondent failed to comply with the clear obligation to invest and build the 61 facilities which was the consideration given for ceding the benefits of the contract to her.
Exhibit NN starting from page 1119 is a record of the operational accounts of the 16 toilets that were built and operated. On page 1120, only three toilets were built and operational in 2001. These were in Tarkwa, Maakro, and Asafo Zion Near School. There is no explanation why more than 6 months after the initial contract date of May 2000, only three toilets had been built. In 2002, page 1121 shows that four more were built. In 2003, two more were built as shown on page 1122. In 2004, no new toilets were built and Respondent accounted for income on 8 toilet sites as opposed to 9 in the previous year. In 2005, Respondent accounted for toilets on 13 sites. 2006 and 2008 saw accounts for 12 sites. 2007 accounts covered 13 sites. So between 2005 and 2008, no new sites were built. One new site was added in 2009 bringing the built sites to 14. In 2010, one new site brought the developments to 15 and in 2011, one more site brought the developments to 16. These records show that the Respondent fell into serious breach of the contract right from the beginning of the contract. And it did not even seem to remember the provision on liquidated ascertained damages for failure to deliver the facilities within 6 months. What is worse, this failure or refusal to abide by the obligations in the build part of the contract did not end with the amendments signed in November 2004. The Respondent continued to breach this important obligation which gave it the role of ‘investor’ with impunity.
Under cross examination, the Respondent’s representative was asked when Respondent commenced and completed the various projects but she stated that she could not remember without refreshing her memory from the operational account tendered in evidence. She was also asked various questions related to how long it took her to commence construction at the project sites after the execution of the agreement but she maintained that the documents with the information were missing or had been taken by Serious Fraud Office and Appellant. I have mentioned these exchanges in cross-examination for the purpose of pointing out that they do not add or subtract from the existing evidence.
The documentary evidence presented by the Respondent regarding when the facilities were constructed is enough to establish that the Respondent failed to honor the contractual provisions regarding informing the Appellant on completion of construction save for one occasion in April 2003 tendered as Exhibit LL. This is the only evidence of Respondent informing the Appellant through its counsel that it had ‘successfully completed’ two facilities. Much was made of it by the trial judge, but my evaluation was that it showed a breach of the condition to hand over each of the completed facilities by stating its cost, more than abiding by the contract. And beyond that information, Respondent did not show that it informed the Appellant about the cost of that facility.
How about the management contract? The obligation of the Respondent was to present an account to the Appellant within 6 months of operation and to start paying a surcharge of 25% of earnings or whatever that figure was reviewed to, on the toilets to the Appellant. This it also totally failed to do. The evidence is that until it came to court, the Respondent had made no effort to account for its operations of the toilets, or pay 25% of its earnings – however reviewed - to the Appellant, thus breaching its obligations under the management side for all of the 10 years or more that the contract run before the court action started.
Respondent’s representative tendered Exhibit Q found on page 1053 which showed that in September 2004, the Appellant had called on them to pay the surcharge. Their response in Exhibit S was that the author of the letter, one Mr. Gorman Hammond of the Manhyia Sub-Metropolitan Council was not a proper party to deal with them, because he was the Administrator of a sub-metro council and not the Metropolitan Chief Executive.
She further testified that the agreement required the KMA to open an account for the purpose of receiving the surcharge fees and at the time KMA had not opened this account. This testimony definitely cannot hold water as a pure response to the obligation to pay the surcharge set out in the agreements because the Respondent could not show that it had presented an account on the cost of construction, or for six months of operation, or that it had tendered payment to the Chief Executive who had asked them to wait for an account to be opened to receive the surcharge fee.
Clearly, it seemed as if the Respondent thought it could conduct itself imperiously, take the sites, build the facilities at its own pace, and do this without accounting to the Assembly. It also seemed that the Respondent failed to appreciate the import of being designated as an ‘investor’ who was to provide the facilities quickly for the city and trigger the right to demolish the existing facilities in order not just to make maximum profit for itself, but to properly regulate the health needs of the city.
The legal import of the above facts is that though time frames and conditions were set for critical activities in both construction and management sides of the contracts, the parties set the operation of the time frames at large by failing to heed them or demand that they are heeded to. There was therefore failure of consideration on the part of the Respondent. In these circumstances, the law of equity could not allow the Respondent to seek the benefit of the specific performance of the Appellant’s obligations or cry breach when the Appellant failed to also perform its obligations under the contract in pristine manner. The refusal of the Appellant to allow the Respondent to demolish existing facilities before receipt of an account for the construction cost and operations could also not amount to breach of their obligations, much more repudiation of the contract.
In Adu v. Atta [1984-86] 1 GLR 647 the Plaintiff sought specific performance of a contract for the sale of house made with the defendant. The facts showed that the Plaintiff, who had been in dire need of funds, agreed to sell the house to the defendant for a sum of money based on an agreed payment plan. The defendant failed to pay in accordance with the terms of the payment plan and finally completed payment after the stipulated time, even after being granted an extension of time by the Plaintiff. Unfortunately for the Plaintiff, the defendant had already sold the house to another party by that time hence his claim for specific performance. The trial court granted the order for specific performance but this was overturned on appeal to the Court of Appeal. The Court of Appeal per Edusei JA on page 652 held that the principles which have always guided the court of equity to decree specific performance are that “the Plaintiff must have shown himself ready, desirous, prompt and eager.” It was further held that the conduct of the Plaintiff was unbecoming of a person seeking the equitable remedy of specific performance because “they did not demonstrate any equity in the performance of their part of the bargain’, and the equitable maxim applicable to such cases is that he who seeks equity must do equity.
In IBM World Trade Corp. v. Hasnem Ent. Ltd [2001-2002] SCGLR 393, the Supreme Court articulated the principle thus “it must be borne in mind that specific performance is an equitable relief. It is exceptional in its character, and a court has the discretion either to grant it or to refuse it. That discretion is exercised on fixed principles. One such principle is that a Plaintiff who seeks specific performance of a contract must show that he is ready and willing to perform his own obligation under the contract, and a failure on his part, or a breach of his own obligation is a bar to his claim for specific performance.”
It is within the above context that the learned judge should have viewed Respondent’s claims for damages and dismissed them.
Another applicable doctrine which did not seem to weigh on the trial Judge’s mind is the doctrine of reasonableness. As stated on page 9 of Professor Bondzi Simpson’s Law of Contract ‘Reasonableness excludes the extreme and absurd’. This is the doctrine that underlies the application of implied terms to contracts. The seminal case of The Moorcock 1889 14 PD 64 gave articulation to the philosophy underlying this doctrine when it comes to implied terms. Bowen LJ said ‘what the law desires to effect by the implication (of non-express terms) is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men; not to impose on one side all the perils of the transaction, or to emancipate one side from all chances of failure, but to make each party promise in law as much, at all events, as it must have been in the contemplation of both parties that he should be responsible for in respect of those perils or chances’
As summarized by Prof Bondzi Simpson on pages 10 and 11, a court ‘will imply reasonable terms when it is necessary to do so in order to give the contract business efficacy. The terms so implied are presumed to reflect the parties’ own intentions’. ’By implying the terms, therefore the court merely does what the parties themselves would have done in fact to cover the situation had they adverted their minds to that situation’.
What is important is that this application of reasonable implied terms is not a mere exercise of discretion, but a necessary function of justice. What did the parties intend to achieve when they designated the Respondent as investor and agreed that it would build 61 toilet facilities for the city over a six month period? Why did they allow the Respondent to keep 75% of the income from operating 61 facilities, and take as long as 20 years, amended to 10 years post recovery of costs, to make profit? Why did the parties include a provision for liquidated damages for non-completion within 6 months? The only inference would be that the city urgently needed the facilities but it didn’t have money of its own to build them upfront. A term of such urgency in building ought therefore to be implied into the contracts. As Asiamah JSC said on page 908 of SSB Ltd. vrs CBAM SERVICES Ltd. cited supra “In every contract there is an implied term that none of the parties thereto would do anything in relation to the performance of the contract which would endanger the purposeful and beneficial realization of the ultimate interest of the contract”.
Thus when the Respondent failed to complete the facilities within a reasonable time, it is absolutely reasonable to infer that it did not want to strictly abide by the terms of contract. And any act done by the Appellants to make the existing toilets usable for the public without reference to the Respondent was within the rights of the Appellant in this contract, and within its’ obligations to the city.
The Respondent claimed damages for breaches of contract on the part of the Appellant. It is trite knowledge that damages are dependent on the presence of violations of terms of the contract, proximity between fault and loss and reasonable foreseeability that the fault will lead to the loss. As stated in Hadley v Baxendale 1854 9 Exch 314 and quoted by the trial judge, damages are dictated by what should reasonably and fairly considered as arising naturally, in the usual course of things from such breach of contract or such as may reasonably supposed to have been in contemplation of the parties at the time they made the contract, as the probable result of a breach of it.
Thus for the acts complained about to lead to damages, they must not only constitute breach of contract, but the breach must have occasioned the loss claimed, and the loss claimed should have been foreseeable to those who were in breach. Having already established satisfaction that the Respondent’s failure to abide by its obligations should be construed against it, the Appellants could also not be said to be in breach as described by the Respondent, owing to the structure of the contract.
By the pleadings, the first of these breaches was supposed to have been in September 2004 when one Mr. Gorman Hammond wrote Exhibit Q directing a termination of the agreement between the parties and allocating some toilets to Town Councils to manage. In her testimony, Mrs. Darko also tendered
Exhibit O which is dated 4th March 2003 and found on page 1049. In this letter, Mr. Gorman wrote on behalf of the Municipal Chief Executive to assembly members, notifying them of allocation of toilets to town councils to manage. Defendant’s representative denied the authority of Mr. Gorman to write these letters – but I find them as being of no import in the context of this suit.
As I have shown, the Respondent was hopelessly in breach of all the consideration required of it by March 2003. By the end of 2003, it had built only nine out of the required 61 facilities. It had not tendered a pesewa to the Appellant as surcharge for operating those 9 toilets. Thus a court of equity ought to see that the position in these letters tendered as Exhibits O and Q totally accord with the proper position of the law when a party has breached an implied term to perform an urgent contract timeously. The Assembly was totally within its rights to invite its town councils to manage the old toilets because it had not been apprised of the operations of the new facilities. I hold that the Appellant did not repudiate the contract under review by not allowing the Respondent to demolish standing toilets when it had not presented the cost for construction of the new facilities as required by the contract, nor presented the account for operation of the new facilities.
But even without this legal landscape, an examination of the two letters show that there could be no basis for the allegations of breach. The allocation of toilets for management of town councils in Exhibit O covered as many as 29 toilets. And out of these 29 locations, only the name Breman can be found in both Exhibit O and Exhibit NN which is evidence of the toilets built by the Respondent by the end of 2003. So Exhibit O did not purport to allocate facilities which were part of those that had already been built, for management by town councils. It directed town councils to manage old facilities where the Respondent had continued in its breach of the obligation to build the new facilities.
What is significant about Exhibit S which is Gorman’s second letter of September 2004 is that the Respondent had itself caused a letter to be written on 31st March 2004, accepting a repudiation of the contract under consideration. This letter by its lawyers was tendered as Exhibit P. In Exhibit P, Respondent voluntarily ended the contractual relationship between the parties in March 2004 – ostensibly in reaction to Gormans letter tendered as Exhibit O. This important letter is found on page 1051 of the Record of Appeal. This necessitates a finding that between March 2004 and November 2004, the parties were not bound by any written contract.
Indeed, it was after the March termination and the Gorman letter in September that the parties renewed their contractual relationship via Exhibit B, which incorporated Exhibit A, in November 2004. With this state of affairs, when Gorman’s letter was written in September 2004, Respondent had no contract with the Appellant. I fail to see why the legal weight of that letter should exercise this or any judgment.
The rest of the complaints about Appellant’s breaches came under five descriptions. The first was the continued operation of the old facilities by various persons working with or under the Appellant. These were in Breman and Bantama (2004), Aboabo Akorem (2009), Atonsu, Santasi, Bantama Market, Oforikrom No 1 near School, Oforikrom No 2 market, Bantama Sefa Boakye, North Suntraso, Nana Foduor.
The second complaint was about the construction of new toilets while the Respondent’s facilities stood – forcing their facility into competition with the new ones. These were at Atonsu, Sawaba, Asawase G-line, Asawase H-Line, Bantama Sefa-Boakye, and Aboabo-Akorem.
The third set of complaints had to do with disturbances against the works that the Respondent was carrying out, and the fourth complaint was about destruction of assets of the Respondent. The fifth set of complaints centered on the Appellant’s alleged refusal to give the Respondent leave to construct stores around the few toilets they build.
I will first deal with the complaints which center on the operation and non-demolition of the old toilets. I have already found that they did not amount to breaches of contract because of the Respondent’s prior breach of the duty to construct the facilities within six months, and account for the construction costs, and its operational income from the new facilities, had not triggered the option of demolishing the old facilities.
The relevant provision can be found in clause 4.9.3 of Exhibits A and B 4.9.3 Existing Toilet Facility (Exhibit A)
The Investor may not demolish the existing toilet facility until a new one of similar capacity has been created. Upon completion and commencement of use of the new facility, the client shall allow the demolishing of all existing old toilet facilities. Where the new facility is later found to be inadequate, the investor shall be given the first option to provide additional facilities under a new contract
4.9.3 Existing Toilet Facility (Exhibit A)
The Investor may not demolish the existing toilet facility until a new one of similar or greater capacity has been created. Where the existing toilet facility must make way for the new toilet facility, the Investor shall demolish the old existing toilet facility after prior consultation with the client. Upon completion and commencement of use of the new facility, the use of the old existing toilet facility shall immediately cease. Where the new facility is later found to be inadequate, the investor shall be given the first option to provide additional facilities under a new contract or an addendum to the present Agreement (Changes underlined)
The wording of these provisions tie the demolition of the old toilet facilities to the creation of a ‘new one of similar or greater capacity’. Second, the demolitions can only be done after prior consultation with the client. Thirdly, the old facilities were to cease on commencement of use of the new facility.
So certain prerequisites have to be established. Were the new ones handed over as completed - to the Appellant? There is no proof of such handing over except in Exhibit LL
Did they have similar or greater capacity? There is no such record. Was consultation done with the Appellant on the acceptance of the new facilities which is what will trigger the Respondent’s right to do the demolitions? There is no such record.
There were certain exchanges with the Respondent’s representative under cross examination found on pages 782 and the Appellant’s representative on page 826 which settle that the Respondent did not execute these acts which would have triggered its right to demolish the old facilities as per the contract. First, the excerpt from Mrs. Darko’s cross examination
Q. When did you notify the Kumasi Metropolitan Assembly of the operation of each of the 16 operational facilities
A. Anytime we commence operating the facility
Q. You have refused to notify Kumasi Metropolitan Assembly of the operational 16 facilities for obvious reasons
A. I notify them and I have been going round with them
Q. You agree the Agreement specifies how you should notify KMA
And that is as far as Respondent went in discharging the burden to prove that it satisfied the prerequisites for the right to demolish the old facilities. The statutory direction of Section 11 of the Evidence Act NRCD 323 1975 is important. Anyone who asserts and would lose on an issue carries a burden to present sufficient evidence. As often cited from Majolagbe v Labi 1959 GLR 190, proof in law is the establishment of facts by proper legal means such as documents, and other references. A party does not prove a case by merely going into the witness box and repeating averments on oath. If there was handing over of the 16 facilities such as Exhibit LL, why were they not tendered.
An Exhibit I find noteworthy is Exhibit HH. It is dated August 2003. It is an internal report of KMA Waste Management Department. It shows that the department inspected the 9 sites that had been constructed at that time to resolve the issue of whether the existing facilities should be demolished or not. But it is not a record of the Respondent submitting its costs for constructing the facilities required under the contract or operational costs, for the purpose of taking decisions on the way forward with the different toilets. It was an internal inspection report.
The Appellant had made out the case in its pleadings that the Appellant was not in breach of the contract and it was the Respondent who was in breach. Thus a burden of proof in law of the notification of KMA of the completion and cost of the structures, and operation of the facilities was demanded and Respondent failed to bother to discharge this burden of proof.
Then when the Appellant’s witness was under cross-examination it was asked questions which suggested that the Respondent had properly handed over the facilities. He denied it. This can be found on page 826.
Q. but you agree that site had already been given to the Plaintiff by first defendant?
A. Yes and to put up a facility within 6 months
Q. Look at Exhibit AA. Read last sentence of first paragraph
Q. You agree this letter was written for and on behalf of MCE by Chief Director of first defendant
Q. The last statement of paragraph 1 of this letter is an unequivocal admission by first defendant of the completion of twenty-four facilities completed and operating
Q.So it is not correct the Plaintiff did not inform 1st defendant about the completion of the projects
A. No because the contract document after successful completion there must be certification by Kumasi Metropolitan Assembly before we start the necessary negotiation
Q. So are you saying the Plaintiff was illegally operating them?
A. As long as it had not been certified we deem it uncompleted i. e. he was operating them illegally
Exhibit AA is a letter written on February 11 2008 by the KMA informing certain persons of the creation of a negotiation team with Terms of Reference that included taking inventory of designated sites and facilities, ascertaining total ‘as built’ costs of completed facilities, making recommendations for demolishing or rehabilitating the existing facilities where new facilities had been built and preparing contract document to guide the operation of the completed facilities, surcharge to be paid and period of facility operation before transfer. These were all steps that Respondent should have undertaken under the contract, but did not.
This exchange clarified Appellant’s position that the Respondent did not go through the process of handing over the facilities – which was the event that would trigger its right to demolish the old facilities or operate them. But what I find from this exchange also is that the Respondent was relying on Exhibit AA written in 2008 to prove that the Appellant recognized the completion of 24 of these facilities, necessarily implying that apart from Exhibit LL, the Respondent truly did not have independent certifications of completion and records of handing over operation accounts on the facilities. My conclusion is that the Respondent failed to prove that it had triggered the right to demolish the old facilities or operate them by reporting on the operations of the new facilities.
So when one considers the complaint about Appellant being in breach because of its continued control over and operation of the old facilities, what Respondent was in essence saying was that although it was flagrantly being delinquent about providing toilet facilities on 61 sites for the city timeously, as it bound itself to do in 2000 and 2004, and was collecting money without accounting for same for the few they put up, the Appellant should be held to ransom in providing alternate sanitary facilities for the communities they had a constitutional and statutory mandate to provide facilities for. My humble consideration is that its’ arguments are not reasonable and ought to have been dismissed by the trial judge.
I will touch on the complaints of Appellant’s alleged refusal to give the Respondent leave to construct stores around the few toilets they built next. The complaint was that the Appellant had awarded a contract to one Edesat Enterprise for the construction of shops at Tarkwa at the site of the facility built by the Respondent. I must say that I think this was the most inappropriate of the Respondent’s complaints and the damages awarded for stores which could have been was the most imprudent of the court’s orders.
Clause 5.15.0, is at the end of the November 2004 amendments and found on page 994 of the ROA. It reads:
5.15.0 The Investor may construct a chain of store rooms in lieu of fence wall for the purpose of fencing off the toilet facility.
By the use of ‘may’, this was an option given to the Respondent as a way of fencing off the toilet facilities it built. The wording of the provision did not give the Respondent rights to claim any number of rooms of stores for any of the facilities or a right to prevent the Assembly from allowing any person to build stores, especially where the Respondent failed to build these stores within a reasonable period. And yet the damages awarded were premised on numbers of stores around all the facilities and estimates of rent for those numbers of stores. These alleged damages were totally remote and unacceptable in law.
According to Exhibit NN, the Tarkwa facility was one of the first two facilities built by the Respondent in 2001. This presupposes that if the Respondent was minded to build the stores six months after the November 2004 amendment, it could easily have done so.
This Edesat contract was supposed to have been awarded through Exhibit DD dated 13th December 2011 – seven long years after the amendment that gave the Respondent the prerogative to build the stores. My evaluation is that it was reasonable for the Appellant to have assumed that the Respondent would not take up the option of building the store rooms and so award the contract to Edesat. The allegation of breach ought to have been dismissed.
Now the complaints about alleged acts of obstruction against the Respondent’s construction works. This included the complaint that persons operating the pre-existing facility, burnt refuse on the Respondent’s construction site at places such as Asawase G-Line and Atonsu despite complaints to the Appellant. Pictures showing charred ground on construction sites were tendered as Exhibits C & D and can be seen on pages 996 & 997 of the ROA. Pictures displaying uncompleted sites with soot on its walls and charred remnants of garbage on the Atonsu site was tendered as Exhibit E found on page 998 of the ROA.
The difficulty with this testimony is in the appreciation of how these acts of burning can constitute a breach of the contract under consideration. They were clearly a nuisance or trespass under tort and any action ought to lie against the persons doing the burning. Further, the Respondent failed to tender any complaints logs of these activities to show that the activities had been brought to the notice of the Assembly as required by the contract. This allegation of breach was unsupported by the evidence
The Respondent urged that their facility was demolished by KMA garbage truck work while it was conveying garbage at Tafo Police Station. She tendered a picture displaying the uncompleted site and the KMA garbage container in evidence as Exhibit M6 found on page 1041. My evaluation of this testimony is that this cause of action may only be grounded in the tort of negligence in the driving of that truck, and not breach of the contract under consideration. This allegation of breach of contract unsupported by the evidence.
In Ayigya Zongo, the witness testified that a manhole dug by the Respondent was covered by unknown persons so Respondent discontinued construction. These would also be acts of tort such as trespass and against those unknown persons. Suffice it to be said that virtually all complaints on breach by the Respondent fell into these categories – reasonable reentry of the contract sites by Appellant because of failure to commence the project on time, acts that are best described as torts of trespass where the tort feasors should have been held liable for their own alleged tortious or criminal acts.
The Respondent failed to make a case that the Appellant had unjustifiably repudiated a contract that Respondent was properly performing and was therefore liable to pay damages for all losses arising from the alleged repudiation. It also failed to prove mere breaches of the contract which should allow damages related to that particular breach. All the findings of breach of contract were also not supported by the evidence. There was no basis for the orders on damages.
Having held that the learned trial judge erred by finding breaches of contract, let me also say that his holdings on the quantum of damages, though not deserved, also violated every principle on the calculation of damages. As stated earlier, damages are founded on reasonably foreseeable losses which are not remote to the breach.
In paragraph 15 of the Statement of Claim, the Respondent set out its daily estimated proceeds less expenses for one site at GH¢140.28. They multiplied this by the 16 facilities allegedly completed and arrived at a daily income of GH¢2,244.48, yearly yield of GH¢819,235.20 and multiplied this by 10 years to arrive at GH¢8, 196,840.96 as the sum due them. They then added a further average earning for the 48 sites that they alleged they had not been able to complete and operationalize by reason of the breaches of the Appellant and arrived at a daily earning of GH¢6733.44. Their claim was that at an average earning of GH¢6733.44, they would be entitled to profit of GH¢24,590,522.88 from these 48 sites. It is the aggregate of GH¢8,196,840.96 and GH¢24,590,522.88 which led to the first claim of GH¢32,787,363.84.
Now even if the Appellants were in breach of contract for allowing third parties to operate some of the existing facilities where the new toilets were built, which they were not, there is nothing proximate about projected earnings from facilities that had not been built or completed, on sites that had been available for 10 years but remained undeveloped by the complaining party. That order for damages of GH¢32,787,363.84 is reversed.
Then regarding the claimed cost of the built facilities, of GH¢ 2,215,102.57, it was made up of the current valuation of the toilets which Respondent presented as GH¢3,296,517.95 less the actual profit it made from January 2001 to July 2012 being GH¢1,007,486.50. Interestingly, the valuation Respondent obtained from a private valuer called Brainchain Consult which was tendered as Exhibits QQ, SS, TT, UU, VV series and which summed all the market values of the facilities to GH¢3,296,517.95 tallied almost perfectly when the income was deducted from it, with the valuation of AESL – done on the order of the court, but which did not take into account the income received by
Respondent over the years. AESL’s current and fair market value for all the facilities which was tendered as Exhibits CE series came to GH¢2,215,102.57 .
This was what Respondent deemed to be the cost of her unrecovered investment as at 2012, and what was awarded by the court as a head of damages. However, it is the Respondent who had failed or refused to give the Appellant the cost of construction immediately after construction, contrary to their contract. Thus there is no basis in getting valuations in 2012 for facilities built between 2001 to 2011, and asking the Appellant to pay the 2012 values of the facilities, when the contract required that the as built costs were to be reimbursed by the Appellant immediately after building same, through the distribution of operational income. What is even more disturbing is that the Respondent failed to give the real cost of construction to the Appellant or the court through the forest of Exhibits that accompanied this case, though it brought the income and expenditure from operations of the facilities.
The order for GH¢2,215,102.57 as unrecovered cost of investment is set aside. In its place, my holding is that the Respondent should be entitled to the contractual costs of the facilities, which is the real expenditure it would have incurred if it had complied with the terms of contract. This is the sum it worked hard to hide, but that is what it is entitled to, so it shall be ferreted out.
But even with this, I found aspects of the evidence before the court also disturbing. The Respondent seemed to constantly shift its evidence on how many of the facilities it had already constructed and operated. In its pleadings, it alleged 16. In Exhibits P and T it claimed it had completed 40 of the facilities and was operating all of them. Then in Exhibit AA, the Appellant’s officers claimed knowledge of completion and operation of 24 facilities. So what is the truth? In Exhibit AA when the Appellant sought to set up a team to audit these facilities and set up contract guidelines to guide the operation of the completed facilities – including the surcharge to be paid, Respondent stridently took up a resistance against that effort through its lawyers in Exhibit BB by alleging that such guidelines already existed. My opinion is that the Respondent has not at all shown candor and good faith in its dealings with the Appellant and the courts, and must not be allowed to profit from that lack of honesty.
We would award GH¢10,000 each for the 35 facilities it is supposed to have worked on – whether completed and not completed - because this is the sum that the contract recognized for completed facilities. This reimbursement amounts to GH¢350,000. And this payment is due without interest because Respondent had the opportunity to present this bill to the Appellant six months shy of May 2000, and failed to do so. Again, this reimbursement sum is properly taken from 75% of the operational income, and this has been ongoing since 2001. At GH¢1,007,486.50, the operational income covered the GH¢350,000 and has allowed the Respondent more than GH¢700,000 as profits per its own records. In addition to the income obtained since the appealed judgment in 2015, the Respondent would be more than compensated for building these facilities. Thus the Appellant has already fulfilled its obligation in this order. All the orders for damages and construction costs are reversed and Respondent is allowed to retain all the income obtained from operating the facilities it had managed to build and operate since 2000 – less an order for liquidated damages we will make.
How about the award of GH¢18,000 for lost materials? It is also set aside because Respondent failed to prove that the Appellant or its duly authorized officer gave the order for the seizure of the materials, in breach of their contract. The Respondent’s case was that the materials were seized by the Appellant’s development officer. Unfortunately, apart from merely alleging in pleadings and repeating in testimony, no evidence was offered to corroborate the actual losses alleged, or their claimed values, or whether the development control officer was executing his regular duties in development control, or was on a frolic of his own, a situation that the Appellant would not carry liability for. Indeed, the trial judge himself said on page 39 of the judgment that ‘the Plaintiff was unable to give the actual value of the items claimed’ and this is why he awarded GH¢18,000 instead of the GH¢25,000 claimed. This order is also reversed.
I am keenly aware that this judgment is at variance with that of the court below but from the totality of the evidence, it is clear to me that the trial court should have found that it is the Respondent who had breached the contract extensively, leading to a loss of consideration for the Appellant. His reasoning that the Respondent drew attention to the alleged breaches in Exhibits U, EE, GG, HH, JJ shows that he failed to appreciate that by the time those letters were all written, the Respondent itself was hopelessly in breach of contract, and had not triggered the right to make the claims alleged. Exhibits T and P were actually termination letters written by Respondent and should have signaled the end of this transaction if Respondent had been so minded. Having affirmed the contract thereafter, its right to allege repudiation by 2004 against the Appellant came to an end. They did not prove breaches by Appellant in any event.
The judgment also failed to grant the Appellant’s counterclaims and it is not at all clear if this was a matter of oversight. Because having awarded the Respondent alleged profits up to 2022 as damages, what could be the basis for refusing to order vacant possession of the facilities which did not belong to it? The Appellant counterclaimed for:
Declaration of title to and recovery of possession of all sites and locations designated as sanitary sites which the Respondent had failed/refused to complete construction on as agreed.
Compensation for breach of contract.
Any other reliefs deemed fit by the court.
We state the obvious and grant declaration of title in the Appellant for all the sanitary sites that Respondent has or failed to develop. We also order immediate recovery of possession of all sites that Respondent is purporting to operate under this contract – having made enough profits to cover its investments and more. And especially because it failed to honour its obligations under the contract.
The contract makes clear that the Respondent committed itself to pay liquidated ascertained damages for each day of failing to deliver up the facilities as required under the agreement. We therefore award liquidated damages of GH¢101,192 to the Appellant as the agreed return for failure to build the 26 untouched facilities. The sum is made up of the agreed rate of GH¢1 per day for 26 facilities from 1st January 2001 to 1st March 2004. It then resumes from 1st June 2005 (six months after November 2004) to 1st December 2012 when this action started and the contract terminated altogether. Interest runs on from this day of judgment.
The appeal is upheld and the orders made in favor of the Respondent are set aside. New orders of recovery of possession and liquidated damages are made in favor of the Appellant. Cost of GH¢10,000 in favour of the Appellant.