KUMASI - A.D 2014
FREDERICK KYEI - (Defendant)

DATE:  12TH MAY, 2014
SUIT NO:  OCC/47/12

The endorsement on the Plaintiff’s writ of summons issued from the registry of this court on 11/06/2012 reads as follows:


The Recovery of liquidated cash sum of GH¢ 50,400.00 inclusive of interest being financial facility which the Plaintiff advanced to the defendant towards the expansion of the defendant’s business somewhere in 2003 but which said amount the defendant has refused to tender and or repay same to Plaintiff despite several acknowledgments and rescheduling of repayments.


A summary of the Plaintiff’s case is that somewhere in the year 2003, the defendant approached her for some financial assistance towards the expansion of his business with a firm binding agreement that the defendant would give the Plaintiff 5% of that amount per month as interest. Irrespective of higher interests charged by financial institutions such as the UT Financial Services (10%), the Plaintiff gave an amount of GH¢ 10,000.00 to the Defendant on the agreed terms. It is the Plaintiff’s case that the Defendant has refused to repay her money together with the agreed interest.


The case of the Defendant is that the Plaintiff expressed interest in investing her money in the local rice business of Frederick Kyei Enterprise Ltd. He negotiated with its director and invested an initial amount of GH¢ 4,800.00 at an agreed interest rate of 10% which was subsequently paid to her and that account closed. A second investment of GH¢10,000.00 at an interest rate of 10% was made which she subsequently withdrew both the principal and interest. Thereafter, she made a third investment of GH¢10,000.00 at an agreed interest of 5% and when interest had accrued to GH¢ 4,000.00, the Plaintiff directed the Company to add it to the principal. Thus, her new investment stood at GH¢14,000.00. A receipt on this amount was issued to the Plaintiff and the subsequent accrued interest of GH¢6000.00 was paid to the Plaintiff’s son upon her instruction whilst she was abroad. Frederick Kyei Enterprise Ltd encountered some difficulties resulting from non-payment of supplies made to some government agencies which brought the company’s operations to a halt in the year 2006.


Three issues were set down for trial but an additional issue arises as a result of the amended statement of defence filed by the Defendant on 04/01/2014. These are the issues:

1. Whether the Ten Thousand Ghana Cedis (GH¢10,000.00) Plaintiff gave to Defendant was a financial assistance to Defendant or an investment in Defendant’s business.

2. Whether the parties agreed that each month Defendant would pay 5% of the Ten thousand Cedis to Plaintiff as interest?

3. Whether or not Defendant has paid any percentage of the amount to Plaintiff.

4. Whether or not Plaintiff invested her money in the defendant’s personal business or in Frederick Kyei Enterprise Limited?


Looking at the pleadings, it will be prudent to resolve the 4th issue first. Afterwards, the remaining issues which seem to be closely linked will be resolved in the course of the judgment. The evidential burden as well as the burden of proof on this issue rest on the Defendant who made these assertions in his amended statement of defence filed on 04/01/2014. In Sumaila Bielbiel v Adamu Dramani & Anor (2012) SCGLR 370 the court held:


“Ordinarily, the burden of persuasion lies on the same party as bears the burden of producing evidence. However, depending upon the pleadings, or whatever facts are admitted, the evidential burden can move to a defendant. The cummulation on the defendant of the evidential burden on the issues to be tried in a case can result in the right to open the case shifting to the defendant…”


The Defendant’s position as gleaned from his testimony is that all transactions in issue were between the Plaintiff and Frederick Kyei Enterprises Ltd of which he is the managing Director. He further told the court that as far back as the year 2004, the Plaintiff expressed interest in investing her money in Fredrick Kyei Enterprise Ltd due to the fluctuation in the dollar. According to him, Fredrick Kyei Enterprise Ltd has a contract with the Government of Ghana for the supply of rice and corn to government institutions and the nature of the business was explained to the Plaintiff and she accepted the terms. Her initial investment was GH¢4,800 and she withdrew it together with the accrued interest. She subsequently invested GH¢10,000.00 and in July 2005, she directed her son to collect her accrued interest. Her last investment was GH¢14,000.00 which was made up of GH¢10,000.00 principal and accrued interest of GH¢ 4,000.00 as evidenced by exhibit 2. It is also in the defendant’s testimony that Frederick Kyei Enterprise Ltd encountered problems as a result of non-payment by the government institutions, The Company was sued and its assets were attached in execution of the judgment. He testified that he is challenging the execution process in suit number OCC/46/12 at a court in Accra (exhibit 5).


In support of his case, the Defendant tendered in evidence a certificate of incorporation of Fredrick Kyei Enterprises Ltd as well as its certificate to commence business which were both issued in February, 2005. A photocopy of the certificate to commence business was admitted in evidence as exhibit 6 subject to the production of the original. However, when the original was later brought to the notice of the court, it was wrongly marked as exhibit A and the certificate of incorporation was also marked as exhibit B. For ease of reference and to ensure consistency in the record, the certificate to commence business will be referred to as exhibit 6 and the certificate of incorporation as exhibit 7. Various receipts issued to the Plaintiff as regards the transaction in issue were also tendered as exhibits 1, 2, 3 4 Y and 4 W.


The Plaintiff’s evidence on this issue was rather terse. She was emphatic that she dealt with the defendant in person but not Fredrick Kyei Enterprise Ltd. She did not tender any of the receipts issued to her in evidence. In sharp contrast to her earlier testimony, she admitted in cross-examination that the Defendant is the MD of Fredrick Kyei Enterprise Ltd and that all her business transactions were done with Fredrick Kyei Enterprise Ltd.


In his written submission, counsel for the Plaintiff urged the court to disregard exhibit A (now exhibit which the Defendant said was a renewal of the original certificate of incorporation. To the extent that the Defendant was unable to produce the certificate of incorporation which allegedly brought “Frederick Kyei Enterprises Ltd” into being, counsel invited the court to reject the document tendered as its renewal as well as the certificate to commence business premised on that. Continuing, counsel argued that if the Defendant’s position is true, then the Plaintiff ought to have received dividends from her investment but not 5% of the profit.


Concluding, counsel reviewed the case law on proof in civil cases. He cited and relied on cases such as Adwubeng v Domfeh (1996-97) SCGLR 660; Agyenim Boateng & 28 Ors v S.K. Boateng ( 2009) 5G.M.J. 58 at 62-63; Zambrama v Segbedzi ( 1991) 2 GLR 221; Takoradi Floor Mills v Samir Faris (2005-2006) SCGLR 882 at page 900 and Faroe Atlantic Co. Ltd v The Attorney General ( 2006) 1 G.M.L.R. 12, SC. In all these cases, the court placed the burden of proof in civil cases on a party who has made a positive averment which has been denied by his opponent.


The arguments advanced by counsel for the defendant on the burden of proof in civil suits are in line with that of counsel for the Plaintiff and no useful purpose will be served in repeating them here. Both counsel are right in their submissions on proof in civil suits.


On the substance of the issue under consideration, counsel relied on the case of Salomon v Salomon (1897) AC 22 and argued that Frederick Kyei Enterprise Ltd has a separate legal personality distinct from its members or officials. From the Plaintiff’s answers in cross-examination, counsel argued that she knew that her investment was made in the business of Frederick Kyei Enterprise Ltd.


From the evidence of the parties, it can be reasonably inferred that the agreement pertaining to the Plaintiff’s money in whatever manner it is described was partly written and partly oral. This is so because even though the evidence shows that the parties are ad idem as regards the interest rate, the receipts which were issued to the Plaintiff and which the parties describe as their agreement was silent on the applicable rate of interest. It is also not in doubt, and indeed, the plaintiff also admitted in cross-examination, that the Defendant is the Managing Director of Frederick Kyei Enterprise Ltd and that all her business transactions were done with Frederick Kyei Enterprise Ltd.


I will now turn to the documents described as receipts which were issued to the Plaintiff (exhibits 1, 2, 3, 4Y and 4W). These receipts are printed on the letter head of Frederick Kyei Enterprise Limited. They bear the postal address, telephone and fax numbers as well as the names of the bankers. Exhibits 1, 2, 3 and 4Y are evidence of the fact that Frederick Kyei of Frederick Kyei Enterprise limited, acting as its Managing Director, had borrowed the sums of money described therein from Salomey Opoku Agyemang for the purchase of rice. The signatories to these documents are: Salomey Opoku  Agyemang  (lender)  and  Frederick  Kyei,  Managing  Director  (Borrower).   In  all  these transactions, the Plaintiff signed her name and this is an indication that she can at least write the English alphabets. None of the documents bear an interpretation clause to show that the document had to be interpreted to Salomey Opoku Agyemang in a language that she understands before she appended her signature. This was not a one off transaction as can be seen from exhibits 1,2,3 4Y and 4 W. Both parties do not have any legal back ground and their true intentions must be gathered from the documents they executed and which they described as receipts. From the history of the transaction between the parties, they understood the words “Lender” and “ Borrower” in their ordinary meaning. I do not think that these words should be given any technical meaning so as to defeat the true intentions of the parties.


The decision in In re Will of Bremansu; Akonu-Baffoe v Buaku & Vandyke (substituted by) Bremansu (2012) 2 SCGLR 1313 will be helpful at this point. The court held as follows:


“ The illiterates’ Protection Act, 1912 (CAP 262), did not give a definition of who is an illiterate. However, whether a person was to be considered as literate or illiterate in that context, must be related to the language in which the document had been prepared; i.e. the ability to read and write the said language. A person who could perfectly read and write Ewe or Fanti language might not be an illiterate within that context … It is the ability to read and write the language in which the document had been written which was relevant, and not whether the person could be classified as illiterate or literate…the ability to sign his name on official documents would not detract from the fact that he was an illiterate.”


In the absence of any evidence to the contrary in the instant suit, I find that the Plaintiff is literate in the English language and perfectly understood the contents of all the documents she signed. The Defendant also knew at all times that he was borrowing money from the Plaintiff but it is the capacity in which he borrowed the money that is in issue. This calls for a determination on the legal status of Frederick Kyei Enterprise Ltd at the time Frederick Kyei issued receipts to the Plaintiff.


Was Frederick Kyei Enterprise Ltd an incorporated company under the Companies Act, 1963 Act 179 at the time that the transaction evidenced by exhibits 1, 2,3, 4Y and 4W happened so as to deem it a separate legal entity?


I have subjected exhibits 6 and 7 (certificate of incorporation and certificate to commence business) to a careful consideration. The Certificate of incorporation reads:


I hereby certify that the


Frederick Kyei Enterprises Limited


Is this day incorporated under the Companies Code, 1963 (Act 179) and that the liability of its members is limited.


Given under my hand and official seal at Victoriaborg, Accra,


This 11th day of February 2005.




FOR: Registrar of Companies, Ghana.


The words: Registered on 05/02/1996 appear on the top left corner of the document.The explanation by the Defendant that exhibit 7 is a renewal of the original certificate is untenable. Act 179 does not make any provision for the renewal of a certificate of incorporation once it is issued even though a registered company is expected to periodically update its records and send returns to the Registrar of Companies. The inability of the Defendant to produce an original certificate of incorporation issued on 05/02/1996 in support of his case is fatal. Reading exhibit 7 as a whole, it is highly probable that prior to the issuance of exhibit 7 on 11/02/2005, Frederick Kyei Enterprises Ltd had been registered under a different name or enactment such as the registration of Business Names Act. All these probabilities would have been resolved in favour of the Defendant if he had tendered the 1996 certificate of incorporation. Again, the Regulations of the Company which was allegedly registered in 1996 would have served a useful purpose if it had been tendered in evidence.


The delivery of a company’s regulations to the Registrar of Companies is a prerequisite in the registration process. A company cannot be formed without submitting its Regulations to the Registrar of Companies in accordance with sections 16 to 18 of Act 179. On the registration of the Regulations, the Registrar shall certify under the Registrar’s seal that the company is incorporated and, in the case of a limited company, that the liability of its members is limited (section 14 (4) of Act 179). Under section 5 of Act 179, from the date of registration mentioned in the certificate of incorporation, the company becomes a body corporate by the name contained in the Regulations and this must be gazette. Section 14(7) also provides that the certificate of incorporation or a copy of that certificate, certified personally by the Registrar, or the Gazette containing the notice of registration is conclusive evidence that the company is duly registered and incorporated under the Act and proceedings cannot be brought in a court to cancel or annul the registration.


When the Plaintiff disputed the legal existence of Frederick Kyei Enterprises Ltd as contained in the Certificate of Incorporation produced in court, the Defendant ought to have brought the Regulations of that company to the notice of this court. In my judgment in the case of Godfred Boakye v Thomcof Company Ltd & 2 Ors (unreported) Suit N0. RPC/72/2011, Commercial Court Kumasi, dated 28/02/2012, I was quick to point out that a company does not come into existence by merely printing its name on a letter head. In that case, I refused to give recognition to a “company” which had signed a Memorandum of Agreement with the Kumasi Metropolitan Assembly (KMA) at a time it had not been duly registered under the Companies Act but merely “existed” on a letter head. In the course of time, another company was formed to take over the entity that merely existed on a letter head but did not ratify the earlier agreement .The alleged directors of one of the companies in that case had printed out letter heads which created the impression that it was a limited liability company but it turned out to be false. It appears a similar situation is happening in this case. From the evidence, Frederick Kyei Enterprise Limited was operating with letter heads bearing that name. This runs through exhibits 1, 2, 3 and some of the exhibit 4 series which all predate the certificate of Incorporation issued on 11/02/2005. Whereas the letterheads and other correspondences refer to Frederick Kyei Enterprise Ltd, the certificate of incorporation and Certificate to commence business issued in 2005 relate to Frederick Kyei Enterprises Ltd. Is FREDERICK KYEI ENTERPRISE LTD the same entity as FREDERICK KYEI ENTERPRISES LTD? I do not want to believe that there is a typographical error on the so called letter head which the business entity has used for over a decade. So, this takes me back to my analysis on the company’s Regulations which if, tendered, would have resolved this issue. In any case the certificate to commence business issued on 14/02/2005 was to take effect from 6/02/1996. Why would a certificate be given in the year 2005 to take retrospective effect from 1996? The discrepancy in the name of the company has also not been explained by the Defendant.


From the forgoing, I find that even though the Defendant purported to be acting as the Managing Director of Frederick Kyei Enterprise Limited as at the time he transacted with the Plaintiff, the legal existence of that company at the time in issue is doubtful. Apart from its existence on a letterhead, there is nothing to show that Frederick Kyei Enterprise Ltd had registered its Regulations with the Registrar of Companies prior to the issuance of the Certificate of Incorporation and the Certificate to commence Business in February, 2005 in the name of Frederick Kyei Enterprise Ltd. Since the alleged company’s legal existence is doubtful, it could not have entered into any agreement (acting through Frederick Kyei) with the Plaintiff. It is my considered opinion that even though the receipts given to the Plaintiff were printed on a letter head of an alleged company, Frederick Kyei was acting in his individual capacity but now wants to hide behind the corporate veil to avoid personal liability.



The last transaction between the parties herein as evidenced by exhibit 4W confirms this finding. Exhibit 4W shows that Frederick Kyei had borrowed some money from the Plaintiff on 13/09/04. This time round, he did not sign as the Managing Director. The document reads:




I write to confirm on this 13th day September 2004 that an amount of ¢40,000,000.00 ( being profit accrued from May – August 2004) have been added to the ¢100,000,000.00 received from Madam Salomey Poku Agyemang. The total amount is ¢140,000,000.00 of which profit will be given monthly.


SGD                                                          SGD


(LENDER)                                                (BORROWER)


Counsel for the Defendant’s arguments on the separate legal existence of a Limited Liability company registered under the Companies Act, Act 179 are indeed sound. However, where the legal existence of the “company” at the time it purported to have entered into transactions with an individual is doubtful, great injustice will be caused if the director or directors are permitted to hide behind the corporate veil to the detriment of the other party. The evidence of the defendant does not also support his position that the Plaintiff invested her money in the Defendant’s company. The money was actually leant out in the lay man’s terms but not an investment properly so called. In any case, the business of Frederick Kyei Enterprises Limited even if it had been registered at the time was the purchase of rice so how did they end up as a “Non- Banking Financial Institution” doing financial investments? Would that not be contrary to the nature of its business? Did they amend their Regulations and obtain a license from the Bank of Ghana to accept deposits from individuals and pay interest thereon? The Defendant’s evidence fails to provide any sound answer to these questions. What Frederick Kyei actually did was to borrow money from the Plaintiff to add up to his working capital. In the circumstance, I will ignore the words “Frederick Kyei Enterprise Limited” printed on the Letter heads/receipts and hold Frederick Kyei personally liable for whatever monies he borrowed from Salomey Opoku Agyemang.


From exhibit 4W, Frederick Kyei had borrowed the total sum of GH¢ 14,000.00 from the Plaintiff herein as at 13/09/04. The Plaintiff’s testimony is to the effect that no interest has been paid on this amount to date but the Defendant insists he has paid GH¢6000.00 on the sum of GH¢14,000.00 as interest but there is no documentation to that effect. The burden of persuasion on this fact is on the Defendant. The mere denial of non-payment of interest in cross-examination does not amount to sufficient proof in law. The Defendant found some wisdom in documenting the GH¢14,000.00 borrowed from the Plaintiff and nothing prevented him from documenting the interest of GH¢6000 allegedly paid to the Plaintiff. On the preponderance of the evidence, he has failed to discharge this burden satisfactorily and he cannot in any way avoid a ruling against him on this disputed fact. Hilodjie v George (2005-2006) SCGLR 974 at 995 applied.


Having failed to discharge this burden, the Plaintiff’s evidence that no interest has ever been paid by the Defendant on the sum of GH¢ 14,000.00 he borrowed will prevail. As the evidence shows, the Defendant has had the use of the Plaintiff’s money for over nine years without paying interest. Should the Plaintiff not receive any benefit from her money? I think that even if she had invested her money in a government bound, interest would have accrued on it. The basis for the award of interest has been discussed in many cases. Denning M.R. in Harbutt’s Plasticin Ltd v Wayne Tank and Pump Co. Ltd (1970) 1 All ER 225 at 336 stated:


“The basis of an award of interest is that the defendant has kept the Plaintiff ought of his money; and the defendant has had the use of it himself so he ought to compensate the Plaintiff accordingly.”


Also, Lord Herschell LC in Chatham & Dover Railway Co v South Eastern Railway Co (1893) AC 429 had this to say:


“.. when money is owing from one party to another and that other is driven to have recourse to legal proceedings in order to recover the amount due to him, the party who is wrongfully withholding the money from the other ought not in justice to benefit by having that money in his possession and enjoying the use of it, when the money ought to be in the possession of the other party who is entitled to its use. Therefore, if I could see my way to do so, I should certainly be disposed to give the appellants, or anybody in similar position, interest upon the amount withheld …”


The basis for the award of interest was again stated in Akoto v Gyamfi-Addo (2005-2006) SCGLR 1081 in similar terms as follows:


“The general principle for the award of interest to a party was that such a party had been unjustifiably kept out of money due to him or her for the relevant period…”


In the instant action, the parties came to terms that the interest payable up to August, 2004 be added to the principal amount. Thus, the new principal amount was GH¢14,000.00. The defendant has disputed the 5% monthly interest which the Plaintiff thinks she is entitled to. From the history of the transaction between the parties, the agreed interest had been 5% per month. However, the last receipt issued to the Plaintiff, exhibit 4W, indicated that she will be entitled to profit on the amount leant out to the Defendant. I am therefore unable to find from the evidence that the 5% monthly interest was still applicable to the GHS 14,000.00 principal amount as per exhibit 4W.


However, this does not affect the Defendant’s obligation to pay interest on the sum of GH¢14,000.00. In the same way, the bad investments made by the Defendant should not also affect his legal obligation to repay all monies borrowed from the Plaintiff. The numerous documents for supplies made to Government institutions which the Defendant tendered are of no relevance as regards his duty to make good his indebtedness to the Plaintiff. The Plaintiff failed to demonstrate in her evidence the time she started calculating the interest to arrive at the sum of GH¢50,040.00 endorsed on her writ of summons. Certainly, it could not have been the year 2003 because some interest had been paid to her before exhibit 4W was made on 13/09/2004.


In the circumstances of this case, substantial justice will be done if interest is awarded based on Rules 1 and 2 (1) of the Court (Award of Interest and Post Judgment Interest) Rules, 2005 C.I. 52. By these rules, interest is to be charged at the prevailing bank rate and at simple interest.


Accordingly, the Plaintiff is to recover from the Defendant the sum of GH¢14,000.00 together with interest at the prevailing bank rate and at simple interest from September 2004 to the date of final payment.


Cost of GH¢1000.00 is awarded against the Defendant.