IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
KUMASI - A.D 2014
STAR OF THE SEA CONSTRUCTION - (Plaintiff)
SAMUEL MENSAH ABROAMPAH - (Defendant)
DATE: 10TH APRIL, 2014
SUIT NO: RPC/2/13
JUDGES: ANGELINA MENSAH-HOMIAH (MRS.) JUSTICE OF THE HIGH COURT
MR. WILLIAM KUSI FOR THE PLAINTIFF
MR. ASIEDU BASOAH FOR THE DEFENDANT
In this suit, the Plaintiff Company seeks to recover an amount of GH¢ 41,000.00 together with interest at the prevailing Bank rate from the Defendant.
The facts of the case as captured in the pleadings are as follows: The Plaintiff allegedly entered into an agreement with the Defendant for the award of a six (6) classroom block contract. The contract sum was three hundred and Seventy Thousand (GH¢370,000.00). The Defendant who was to bring the Contract from the Regional Minister requested that the Plaintiff paid an amount of forty-five thousand Ghana Cedis (GH¢ 45,000.00) to enable him to secure the contract. The said money was allegedly paid in two tranches to the Defendant by cheque but the contract was never awarded. Following a complaint lodged with the Police, the Defendant refunded an amount of GH¢ 4,000.00, leaving a balance of GH¢ 41,000.00.
In his further amended statement of defence filed on 27/02/2014, the Defendant denied the Plaintiff’s claim. His story was that prior to the issuance of the cheques in his name, there was a meeting with the PRO of the Regional Minister at that time (Aubrey Mends), the Plaintiff Company’s representative by name Patrick Acheampong, his brother as well as the Defendant. At the said meeting, the PRO explained that the contract was coming from the Regional Minister and the Plaintiff’s representatives agreed. A series of meetings took place between the same parties subsequently and the Plaintiff knew throughout the transaction that the contract was coming from the Regional Minister. It is the Defendant’s case that the agreement or contract between the parties herein is illegal and therefore unenforceable.
In its reply, the Plaintiff denied any knowledge of the Regional Minister’s involvement and the assertion that the cheques issued in the name of the Defendant were for the benefit of the Regional Minister.
Two issues were set down for trial by the pre-trial judge, namely:
1. Whether or not the Defendant promised to secure for the Plaintiff a contract from the Regional Minister for the construction of a six (6) unit classroom block?
2. Whether or not the sum of GH¢45,000.00 paid by the Plaintiff to the Defendant was meant for Aubrey Mends.
A third issue arises for determination as a result of the amendment made to the defence on 27/02/2014. That is
3. Whether or not the contract or agreement between the Parties is illegal and unenforceable.
The issue of illegality is crucial and will be determined first.
This issue arises from the Defendant’s further amended pleading filed on 27/02/2014. In Barkers-Woode v Nana Fitz (2007-2008) SCGLR 879, the court took the view that a defendant carries the burden of persuasion on averments in his statement of defence. By the provisions of section 11(4) and 12 of the Evidence Act, 1975 N.R.C.D. 323, the Defendant is enjoined to introduce evidence on this issue on the balance of probabilities so that on all the evidence, a reasonable mind could conclude that the existence of the fact was more probable than its non-existence. In this light, both the evidential burden and the burden of persuasion on this issue rest on the Defendant. See Sumaila Bielbiel v
Adamu Dramani & Another (2012) SCGLR 370.
The evidence adduced by the Defendant which support this issue will be reproduced for emphasis:
“I was in my office somewhere in 2011 and Aubrey Mends came there and informed me that he had a contract from the Regional Minister from the Regional Office and if I know someone who could execute it, I should inform him. I informed Oppong and Oppong said he could not do. .. I know him to be a contractor. I cannot tell if he still does that work. Oppong said he would look for someone who is capable of doing it. About a week or two after, he came to the office with Patrick Acheampong. I asked them of their mission and Mr. Oppong said he had informed Mr. Patrick Acheampong about what I had conveyed to him. Patrick Acheampong said Oppong had told him everything and that he was interested.”
Continuing, the Defendant stated:
“Mr. Patrick Acheampong agreed to pay GH¢45,000.00. The GH¢ 45,000.00 was an amount that Patrick Acheampong was supposed to pay for the contract to be given to him as a processing fee. The PRO had demanded for that sum. Patrick Acheampong knew about it. The Regional Minister was to benefit from this GH¢45,000.00 as the Pro had told me. Patrick and Oppong knew about this… Both amounts were paid separately by cheque. After the money and been paid, I cashed it at the bank and gave it to Mr. Aubrey Mends. After that, we were waiting for him to give the contract to Patrick Acheampong. I do not know where the money ultimately found itself. I gave the money to Aubrey Mends and he said he had given it to the Regional Minister. The Plaintiff did not receive the Contract.”
The Defendant denied in cross-examination that Aubrey Mends’ name only surfaced after the GH¢45,000 had been paid and the contract was not forthcoming.
Patrick Acheampong testified on behalf of the Plaintiff Company. His version of the story was that he met a friend who told him he knew someone at the Regional Coordinating Council (RCC). According to him, his friend said the RCC had been bringing work to contractors through selective tendering. This friend led him to the Defendant who confirmed that the RCC had been bringing work to him for contractors through the Regional Minister. Subsequently, he paid an amount of GH¢45,000 in two tranches by cheque issued in the Defendant’s name and cashed by him as per exhibit A.
Thereafter, the contract was not forthcoming. Following a report to the Police, the Defendant refunded an amount of GH¢4,000.00 leaving a balance of GH¢41,000.00.According to the Plaintiff’ representative, the name Aubrey Mends came up after he had gone to demand the contract award letter and the Defendant had failed to give it to him. In cross-examination, it came up that the Regional Minister in issue is one Dr Agyemang. The Plaintiff’s representative further said in cross-examination that since the Plaintiff had no agreement with the Regional Minister or Aubrey Mends as regards the money in issue, the company could not have dragged them to court.
For the Defendant, Counsel submitted that the Plaintiff who claims to have been in the construction business and is very conversant with government contracts, ought to have known that the agreement he had with the Defendant was in breach of the Public Procurement Act, 2003, Act 663. Referring to various provisions of the Act, Counsel argued that the Selective Tendering method alluded to by the Plaintiff falls under Restricted Tendering as provided for under sections 38 and 39 of Act 663.
Dilating on these provisions, counsel submitted that where a procurement entity engages in restricted tendering, it shall cause a notice of the Restricted-Tendering to be published in the Public Procurement Bulletin. He continued that the procedure on this type of tendering include inviting tenders, providing tender documents, submission of tender securities by suppliers or contractors to the procurement entity, opening of tenders, publicity, examination of tenders and evaluation of tenders ( Part V). Counsel came to the conclusion that the successful tender shall be the tender with the lowest evaluated tender price (section 59 (3) and (4) and not the tenderer who pays an amount of GH¢45,000.00.
By the provisions of Act 633, specifically sections 15 to 17, counsel again stressed that procurement structures are put in place such that the decision to award a contract becomes a corporate decision which involves a Tender Committee and not an individual decision and this procedure is known to the Plaintiff. He crowned his submissions on the Public Procurement Act by a reference to section 92 thereof. This section deals with offences under the Act. Among these offenses is directly or indirectly influencing in any manner or attempting to influence in any manner the procurement process to obtain an unfair advantage in the award of a procurement contract. In his view, the basis on which this contract was formed smacks of illegality and must not be countenanced by this court.
From the Public Procurement Act, Counsel shifted his arguments to case law. First, he cited the case of Olatiboye v Captan (1968) GLR 146 where Amissah J.A., sitting as an additional High Court Judge referred to a statement by Devlin J (as he then was) in St. John Shipping Corporation v Joseph Rank
Ltd (1956) 3 All ER 683 at 687:
“There are two general principles. The first is that a contract which is entered into with the object of committing an illegal act is unenforceable. The application of this principle depends on proof of intent at the time the contract was made, to break the law; if the intent is mutual the contract is not enforceable at all, and if unilateral, it is enforceable at the suit of the party who proved to have it… The 2nd Principle is that the court will not enforce a contract which is expressly or impliedly prohibited by statute. If the contract is of this class it does not matter what the intent of the parties is if the statute prohibits the contract, it is unenforceable whether the parties meant to break the law or not. A significant distinction between the two is this: In the former class one has only to look and see what acts the statute prohibits; it does not matter whether or not it prohibits a contract, if a contract is deliberately made to do a prohibited act, that contract will be unenforceable. In the latter class, one has to consider not what acts the statute prohibits, but what contracts it prohibits; but one is not concerned at all with the intent of the parties; if the parties enter into a prohibited contract, that contract is unenforceable.”
Other case law relied on by Counsel for the Defendant on the unenforceability of illegal contracts are these: 1) Addy v Irani (1991) 2 GLR 30; Okantey v Kwaddey (1975) 1 GLR 193 and Ramia v Chiavelli & Another (1967) GLR 737. In all these cases, the courts refused to aid a Plaintiff who had entered into an illegal contract.
In his rather comparatively brief address, Counsel for the Plaintiff argued that there is over whelming evidence on record to show that Plaintiff did not know Aubrey Mends prior to the payment of money to the Defendant who said he could secure a contract for the Plaintiff. Another argument put up by Counsel was that there is no provision in the Public Procurement Act of 2003 which forbids or seeks to forbid the securing of a contract through an agent. Relying on St. John Shipping Corporation v Joseph Rank Ltd (referred to, supra), Counsel further submitted that the courts have been sensitive to situations where non-enforcement leads to unjust enrichment of the party who has failed to perform his side of the bargain.
It stands undisputed from the evidence on record that two cheques with a total face value of GH¢45,000.00 were issued in the Defendant’s name and he subsequently cashed them 02/09/2011 and 12/09/2011 (exhibit A). There are divergent views as regards the purpose of these payments. Whereas the Plaintiff holds the view that this money was paid to enable the Defendant to secure a contract for it, the Defendant says it was to be used as a processing fee. Both Parties are ad idem as regards the procurement structures and processes under the Public Procurement Act of 2003 Act 663, particularly, the role played by the Tender Committee. It is also not in dispute that the transaction between the parties is governed by the provisions of the said Procurement Act. After a careful reading, I agree with the submission that the Plaintiff’s “Selective method” falls under the Restricted Tendering under section 38 of Act 663. This section deals with two instances:
(a) if goods, works or services are available only from a limited number of suppliers or contractors; or
(b) If the time and cost required to examine and evaluate a large number of tenders is disproportionate to the value of goods, works or services to be procured.
It cannot be said be any stretch of imagination that only a limited number of contractors are available for the construction of a six-unit classroom block. It appears to me that the number of available contractors for a job of this nature far exceeds the demand for them. Therefore, Counsel’s submission that the Plaintiff’s case does not fall under Section 38 (a) of the Act cannot be wrong. In my considered opinion, section 39(2) which enjoins the procurement entity to publish a notice of selective tendering award in the Public Procurement Bulletin applies to the circumstances of this case. A procurement entity is at liberty to use the appropriate tender documents as in the fourth schedule with minimum changes acceptable to the board. Under section 50 of the Act, the contents of the tender documents shall include the location where the works are to be effected or the services are to be provided, the terms and conditions of the procurement contract and the contract form to be signed by the parties, among others. Section 50 is so extensive as regards the contents of the tender document.
In the case before me, the Plaintiff has failed to demonstrate that the contract which the company was seeking had been published in a Procurement Bulletin and that any tender documents had been obtained and filed in accordance with the relevant provisions of Act 663. The evidence shows that as of the time the Plaintiff paid the money, its representative (director) did not even know the exact location of the contract but he was convinced that he would be awarded a contract for the construction of a six-unit class room block valued GH¢370,000.00 by the Regional Minister in the person of Dr Agyemang. It baffles me that an mount representing over 10% of the contract sum will be paid to or through a person who is not the tender entity as processing fee or whichever manner it is described with the expectation that a valid contract will be awarded. If indeed, any amount of money had been paid as processing fees, an official receipt would have been issued and the same ought to have been offered as proof in this case. Is it not intriguing that the Defendant and one Oppong took GH¢3,000 and GH¢2000 as their share of the so called processing fees? These figures were given by the Defendant himself but the Plaintiff has disputed the same. Why would the Defendant and some other person receive a “cut” of GH¢ 5000.00 in total if the amount paid was meant for processing fees?
On the totality of the evidence before me, I find that the payment of GH¢ 45,000 could not and was not meant for any processing fees for a contract worth GH¢370,000.00. The said payment was also not done in accordance with the provisions of the Public Procurement Act. As rightly argued by counsel for the Defendant, the Plaintiff has been in the construction business and knew, or ought to have known, that the procedure he followed to secure the contract was at variance with the legally acceptable methods as provided for by the Public Procurement Act. At best, the monies paid to the Defendant by the Plaintiff can be described as a payment to influence the procurement process irrespective of where the money ended up. Such acts are proscribed by section 92 (2) (b) of Act 663.
Under that section, it is an offence to directly or indirectly influence in any manner or attempt to influence in any manner the procurement process to obtain an unfair advantage in the award of a procurement contract. It is unimaginable to think that the Plaintiff paid this huge sum and expected to be given the contract in issue on a silver platter without going through the due process. Whatever agreement that the parties entered into which culminated in the payment of the sum of GH¢45,000.00 to the Defendant was not only contrary to the Provisions of Act 663 but also an act of corruption. It was an inducement so to speak for the award of the contract in issue.
Even if the procedure under Act 663 for the award of contracts had been followed, the illegality of the payment of GH¢45,000 to as it were directly or indirectly influence the decision making process still remains.
The principle of the unenforceability of contracts which are void for illegality runs through the case law cited and relied on by Counsel for the Defendant. To these, I would also bring on board a more recent case of Mensah v Ahenfie Cloth Sellers Association (2010) SCGLR 680. At page 703, Brobbey JSC made the following statement as regards illegal contracts:
“An illegal contract is one which is null and void; it is of no effect whatsoever and is clearly unenforceable. It affects both parties to the contract and none of them can enforce it.”
His Lordship gave examples of illegal contracts on the same page:
“A typical instance of an illegal contract is agreement by drug dealers to trade in drugs. Another instance of such transaction was considered in the case of Addy v Irani Brothers (1991) 2 GLR 30 where the Plaintiff sued for money allegedly acquired illegally by selling goods above the legally- controlled price and for foreign money acquired through changing it at “black market”. It was held that the subject -matter in that case, like drugs, were illegal and therefore irrecoverable through the court.” Olatiboye v Captan (referred to supra) cited.
I find on the totality of the evidence on record that the payment of GH¢ 45,000.00 by the Plaintiff’s director to the Defendant was in furtherance of an agreement to influence the holders of a public office in the award of a contract which falls within the purview of the Public Procurement Act of 2003.
Indeed, section 93 of Act 663 deals with corrupt practices. It states:
Section 93 (1) “Entities and participants in a procurement process shall, in undertaking procurement activities, abide by the provisions of article 284 of the Constitution.”
Section 93(2) An act amounts to a corrupt practice if so construed within the meaning of corruption as defined in the Criminal Offences Act, 1960 (Act 29). In this regard, article 284 of the 1992 constitution as well as the relevant provisions of Act 29 must be considered. These are stated below:
Article 284 of 1992 Constitution:
“A public officer shall not put himself in a position where his personal interest conflicts or is likely to conflict with the performance of the functions of his office.”
Section 239(2) of Act 29:
“A person who corrupts any other person in respect of a duty as a public officer or juror commits a misdemeanor.”
Again, section 241 of Act 29 explains what amount to corruption of public officer as indicated below:
Sec 241 of Act 29 states in part:
“A person commits the criminal offence of corrupting a public officer … in respect of the duties of office if that person endeavours, directly or indirectly, to influence the conduct of the public officer in respect of the duties of office by the gift, promise or prospect of a valuable consideration to be received by the public officer or by any other person, from any other person.”
It flows from Part V of the Procurement Act that the contract in issue could never have been awarded without the involvement of the Tender Committee of the procurement entity most of whom (if not all), are public officers. Having expressed interest in the contract in issue, the Plaintiff, acting through its director, Patrick Acheampong ought to have adhered to the provisions of section 93 of Act 663 as well as the applicable sections of the Criminal and Other Offences Act (1960) Act 29.
By the foregoing analysis, the agreement to pay money to a third party, in whatsoever way it is described, for the sole purpose of securing a government contract sins against the Public Procurement Act and it is also an offence under the Criminal offences Act, Act 29. The Plaintiff has been unable to show that he can recover this money without the defendant raising the defence of illegality. See Taylor v Chester 21 L.T. 359. As such, the agreement between the parties herein was void ab initio and cannot be enforced by a court of competent jurisdiction. Enforcing this agreement will be tantamount to enforcing an agreement to commit a crime under section 239(2) of the Criminal Offences Act, Act 29 in the sense that the parties knew that the ultimate recipient of the money was the holder of a public office. In other words, the Plaintiff knew right from the time of payment that the money was not for the personal benefit of the Defendant.
A case in point is Parkinson v College of Ambulance Ltd (1925) 2 K.B. 31. In that case, the secretary of a charitable institution promised the plaintiff that he would secure him the title of knighthood if he would make a sufficient donation to the organization’s funds. In consideration of this promise, the plaintiff paid three thousand pounds and promised more when the honour is received. The knighthood never materialized and the plaintiff sued for the return of the money. The Plaintiff’s action failed on the ground that it was founded on a contract which tended to promote inefficiency and corruption in public life and that was illegal at common law. I think our courts would not have arrived at a different conclusion on the same facts.
I notice that counsel for the Plaintiff introduced the principle of unjust enrichment in his written submissions. How is this principle applicable to the circumstances of this case?
In the dictionary of law by L.B. Curzon, “unjust enrichment” is defined as the unjust obtaining of money benefits at the expense of another.” It is a general equitable principle that a person should not be allowed to profit at another’s expense without making restitution. “Unjust enrichment” has variously been described as improper benefit, improper gain, and undeserved gain, and unfair betterment, benefit by chance or mistake, among others.
In Quagraine v Adams (1981) GLR 599, CA it was held as follows:
“Whenever a defendant was unjustifiably enriched at the expense of a plaintiff, the plaintiff could compel his ill-gotten gains out of him on the principle of unjust enrichment.” Dictum of Lord Wright M.R. in Brook's Wharf and Bull Wharf Ltd. v. Goodman Brothers  1 K.B. 534 at p.545, C.A. applied.
Being an equitable remedy, a person seeking solace therein must adhere to the principles of equity. Equity follows the law. Where the parties are not in pari delicto (equally guilty), the court will in certain circumstances allow the innocent party to recover any monies paid or property that has been transferred to another under a contract. To succeed, a plaintiff must show that he was induced to enter into the contract by fraud, duress or oppression at the hands of the defendant and the like. The Plaintiff failed to demonstrate in court that any of these factors apply to him.
In Kwarteng v Donkor (1962) 1 G.L.R. 20, the court held that an agreement to improperly use influence to secure for someone the election to a public stool merely for financial consideration and irrespective of the candidate’s merit is injurious to public interest and illegal.
Further, the court held that money paid in furtherance of an illegal contract cannot be recoverable where the parties are in pari delicto. In Addy v Irani (1991) 2 G.L.R. 30, the court held that the Plaintiff could not recover monies paid under an illegal contract. In that case, the Plaintiff failed to establish that he was an innocent agent or unwilling party in the whole transaction. In the view of the court, he was in pari delicto with the defendant and could not recover moneys under the illegal agreement.
As I have already indicated, equity follows the law. I will also refer to the maxim that “he who comes to equity, must come with clean hands.” At the time of entering this agreement which has been found to be unenforceable, the Plaintiff, who is an ardent contractor knew, or ought to have known that such payments are proscribed. Yet, he willingly issued two cheques to the Defendant who has actually received the cash. It is obvious from this transaction that both parties are equally guilty and the Plaintiff cannot recover the money paid to the Defendant in court. The Plaintiff’s hands are not clean and so equity cannot come to its aid.
The Plaintiff’s action fails. The parties are to bear their expenses. No order as to cost.