IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT
KUMASI - A.D 2019
LAWRENCE BRUCE KYEI - (Plaintiff)
FIRST ALLIED SAVINGS AND LOANS LTD - (Defendant)
DATE: 2 ND APRIL, 2019
SUIT NO: RPC 54/2018
JUDGES: DR. RICHMOND OSEI-HWERE, J
KWAMINA MENSAH FOR PLAINTIFF/JUDGMENT CREDITOR/RESPONDENT
YAW ACHEAMPONG BOAFO WITH ADWOA BENASO ASUMADU-SEKYI FOR DEFENDANT/JUDGMENT DEBTOR/APPLICANT
This is a motion on notice praying this Honourable Court for an order setting aside the default judgment entered against the Defendant/Applicant and for leave to file a statement of defence. The applicant is also seeking an order to set aside the Entry of Judgment and all execution processes taken pursuant to the default judgment.
The grounds of the application are contained in the Affidavit in Support filed on the 5th of March, 2019.
The background to this application is that the Plaintiff/Applicant/Respondent (hereinafter referred to as the Respondent) issued a Writ of Summons against the Defendant/Respondent/Applicant (hereinafter referred to as the Applicant) on the 13th of July, 2018. The Respondent’s claim against the Applicant are for:
a. An order for the recovery of cash, the sum of FIVE HUNDRED THOUSAND GHANA CEDIS (GHC500, 000.00), being the amount of money invested as a fixed deposit in the Defendant’s Institution, the said investment being made on 2nd June, 2018.
b. Interest on the of FIVE HUNDRED THOUSAND GHANA CEDIS (GHC500, 000.00) as agreed per the fixed deposit agreement entered into between the Plaintiff and the Defendant till date of final payment.
c. An order for the recovery of cash, the sum of FIVE HUNDRED THOUSAND GHANA CEDIS (GHC500,000.00), being the amount of money invested as a fixed deposit in the Defendant’s Institution, the said investment being made on 11th April, 2018.
d. Interest on the of FIVE HUNDRED THOUSAND GHANA CEDIS (GHC500, 000.00) as agreed per the fixed deposit agreement entered into between the Plaintiff and the Defendant till date of final payment.
e. General damages for breach of contract.
f. Cost of litigation.
g. SUCH FURTHER ORDER(S) as this Honourable Court may deem fit.
The applicant was served with the writ of summons and statement of claim on the very day it was issued i.e. 13th July, 2018. On 19th July, 2018 the applicant herein caused its lawyers to enter appearance on its behalf. Subsequently, this Honorable Court entered default judgment in favor of the Respondent on the 2nd November, 2018. This was after the respondent herein had filed a motion on notice for an order for final judgment in default of defence against the applicant herein. On 26th October, 2018, the said motion on notice together with the affidavit in support was served on the applicant through its lawyer but it failed or refused to file an affidavit in response to the motion. When the application came up for hearing on 2nd November, 2018, both the applicant herein and its lawyer were absent in court without any excuse. On 9th November, 2018 Entry of Judgment in respect of the default judgment was filed and the same was subsequently served on the applicant herein.
After the entry of judgment, the applicant herein and lawyers of the respondent herein entered into an agreement in relation to the judgment debt. This agreement was attached to the respondent’s affidavit in opposition to the instant application and marked Exhibit 1. It is dated 27th November, 2018. About the legal effect of this agreement, more anon!
In moving the motion, Counsel for the Applicant prayed the Court to set aside the default judgment. He relied on the depositions contained in the affidavit in support of the motion. Counsel took aim at Exhibit 1. He argued that Exhibit 1 is invalid as the Respondent herein is not a party to the said agreement. He submitted that the agreement is between Darls Legal Consult and the Applicant herein and since the former is not a party to the suit, the agreement cannot bind the applicant when it comes to the rights of the respondent in this action. He submitted that the court should, therefore, disregard the respondent’s invitation to the court to treat the terms of the agreement as an admission of the applicant’s indebtedness to the respondent. He submitted that access to justice is a constitutional right. Thus, the right of a party to come to court to seek relief cannot be whittled away by a private arrangement. He submitted further that Exhibit 1 cannot prevent the applicant from applying to the court to set aside the default judgment. Counsel also invited the court to set aside all the execution processes as they are invalid.
In response to the application, counsel for the respondent reiterated the respondent’s opposition to the application. Counsel relied on the affidavit in opposition to the application filed on the 13th of March, 2019. Counsel submitted that the admission made by the applicant in Exhibit 1 shows clearly that the applicant has no defence to the action. He cited the case of In re Asere Stool; Nikoi Olai Amontai IV (Substituted by) Tafo Amon II vrs Akotia Owirsika III (Substituted by) Laryea Ayiku III [2005-2006] SCGLR 637 at 656, among other authorities and argued that per the admission the applicant is estopped from setting aside the default judgment. He invited the court to dismiss the application as the applicant has failed to give a reasonable excuse for its failure to file a defence and that it has no defence to the action.
Order 10 rule 6(1) of the High Court Civil Procedure Rule 2004 (CI 47) empowers the court to set aside a judgement entered in default of defence on the application of the party affected.
The power to set aside judgment in default of appearance is a discretionary power exercised by the court. This discretionary power is, however, exercised with prudence. Some key factors are considered by the court:
First and foremost, a court in determining an application to set aside default judgement ought to consider whether the default judgement is regular or irregular. In Botchway v Daniels (1991) GLR 262, it was held that:
“In deciding whether or not to set aside a default judgement, it is useful if the court first determines if the judgement in question is regular or irregular.”
Where the default judgment was obtained prematurely or is irregular, the applicant would be entitled to have it set aside without terms. However, in compliance with Order 81 rule 2(2) of CI 47, the applicant must bring the application within a reasonable time and he/she ought not to have taken any fresh step after knowledge of the irregularity.
On the other hand, where the default judgement is regular, the defendant who seeks to set aside the default judgement must (1) offer a reasonable explanation for his default in filling a defence; and (2) show by the affidavit in support of his application or by some other acceptable means that he had a reasonable defence to the action and therefore it would be unjust not to have the case decided on the merits. See Botchway v Daniels(supra).
In Agyeman v Ghana Railway and Ports Authority (1969) CC 60, CA the court stated as follows:
“the principle which guides a judge in the exercise of his discretion to set aside a judgement obtained in default of appearance or of defence is we think… that the party praying for the exercise of the court’s discretion must disclose either by affidavit or some other acceptable means that he has a reasonable defence to the claim, and that it would be, in the circumstances, unjust to have his case unadjudicated upon”.
This principle has been affirmed in cases such as Quarmyne v Afeyesi [1984-86] 2 GLR 430 and Haruna v Arts Council of Ghana (1992) GLR 1.
In the instant case, the applicant is not challenging the regularity of the default judgment. In fact, the regularity of the judgment is not in doubt. It is clear from the record that the applicant defaulted in filling a defence and it also failed to contest the application to enter the default judgment after it was duly served with the processes.
Also, it is my considered opinion that the applicant’s explanation for its failure to enter an appearance is untenable. For, a mere desire to settle a matter is no excuse for failure to comply with the rules of court. In view of this, it is my respectful opinion that the applicant has not given a satisfactory explanation to the default in filling a defence.
The profound question is: does the applicant have an arguable defence to the claim which would make it unjust if the case is not decided on its merits?
Exhibit 1 is an agreement betweenApplicant hereinon one hand and Darls Legal Consult, lawyers for the Respondent hereinon the other. The preamble to the agreement reads as follows:
“This AGREEMENT is made the 27th day of NOVEMBER, 2018 BETWEEN FIRST ALLIED SAVINGS AND LOANS LTD. (hereinafter called ‘FASL’), a Company incorporated under the laws of Ghana and having its registered office at Kumasi in the Ashanti Region acting per its Head Administration and Human Resources MR. AUGUSTINE AMAKYE of H/NO. Plot K71, HYDROFONE ESTATE, ACCRA of one part AND DARLS LEGAL CONSULT (hereinafter called ‘DARLS’) acting per its Managing Partner KWAMINA MENSAH of P.O. BOX 11511, KUMASI of the other part.”
It is clear from the preamble to the agreement that the respondent herein is not a party to the agreement. There is no indication that Darls Legal Consult is acting on behalf of the respondent, Lawrence Bruce Kyei.
The terms of the agreement are, however, very instructive. It states in part as follows:
1. KWAMINA MENSAH of DARLS commenced actions against FASL in suits having the following titles and for the following sums:
a. LAWRENCE BRUCH KYEI (Plaintiff) v FIRST ALLIED SAVINGS AND LOANS LTD (Defendant) bearing SUIT NO. RPC/54/2018;
b. MRS. DARLENE KYEI (Plaintiff) vrs FIRST ALLIED SAVINGS AND LOANS LTD (Defendant) bearing SUIT NO. C2/123/18 for GHC132,278.70.
c. DONKOR KWABENA ADDO (Plaintiff) vrs FIRST ALLIED SAVINGS AND LOANS LTD (Defendant) bearing suit numbers NO. A2/31/19 and A2/30/19 for a total of GHC89,600.00 excluding interest.
2. Whereas the said LAWRENCE BRUCE KYEI had obtained judgment in his favour amounting to GHC1,107,289.99
3. Whereas entry of judgment has been duly served on FASL by LAWRENCE BRUCE KYEI;
4. Whereas LAWRENCE BRUCE KYEI had set in motion a FIERI FACIAS on 19th November, 2018.
5. Whereas the properties of FASL was duly attached in execution of the said judgment debt, the said properties including the following.
a. PLOT NO. OTB 662, ADUM, KUMASI;
b. PROPERTY AT ASAFO, KUMASI
c. PROPERTY AT WOOD VILLAGE, SOKOBAN, KUMASI;
d. ALL PERSONAL PROPERTIES IN THE OFFICE OF FIRST ALLIED SAVINGS AND LOANS AT PLOT NO. OTB 662, ADUM, KUMASI;
e. ALL PERSONAL PROPERTIES IN THE OFFICE OF FIRST ALLIED SAVINGS AND LOANS LTD., AT ASAFO, KUMASI.
f. ALL PERSONAL PROPERTIES IN THE OFFICE OF FIRST ALLIED SAVINGS AND LOANS LTD., AT WOOD VILLAGE, SOKOBAN, KUMASI.
6. And whereas FASL has approached DARLS for DARLS to temporary allow it to open its office in order to meet its investors and to secure the machines and servers of FASL so that its operations will not collapse and also to be able to settle the above mentioned cases with DARLS; …”
As part of the terms of the contract, the parties agreed as follows:
“1. That FASL shall leave two vehicles with DARLS with registration numbers GT 5722-15 and GT 5718-15 each value being determined by the valuer(s) at STC.
2. That the attachment by the means of FIERI FACIAS on 19th November, 2018 still holds.
3. That FASL has accepted the full sum of GHC1,107,289.99 as the judgement due LAWRENCE BRUCH KYEI subject to the interest accruing on the said judgment.
4. That FASL has accepted the full sum of GHC132,278.70 as the judgment due MRS. DARLENE KYEI subject to the interest accruing on the said judgment.
5. That FASL has accepted the full sum of GHC89,600.00 excluding interest as the judgment due Donkor Kwabena Addo subject to the interest accruing on the said judgment.
6. That FASL shall not commence or proceed with any further legal and court process either by itself or through its lawyers or any third party in respect of the above-mentioned suits or any other fresh suit.
7. That DARLS has the right to repudiate this agreement and enforce the said attachment order when the said agreement is not compiled with by the FASL and further that FASL agrees not to institute any fresh or file any court or legal process by itself, its lawyers or through third parties before or after DARLS commences proceedings to enforce the said attachment …”
A careful reading of the terms of the agreement reveal that there is an intention to confer a benefit on third parties by the parties to the contract. Per the agreement, the applicant accepted the sums of GHC 1,107,289.99, GHC 132,278.70 and GHC 89,600 as the full sums due to Lawrence Bruce Kyei (respondent herein), Darlene Kyei and Donkor Kwabena Addo respectively in respect of its indebtedness.Under the agreement, it (applicant) undertook not to commence or proceed with any action in respect of the judgment debt owed to the afore-named persons including the respondent herein.
In Exhibit 1, the applicant also agreed to a payment plan to liquidate the debt. That portion of the agreement provides:
“11. That FASL agrees to pay the said sum of GHC1,330,000.00 owed the above-mentioned clients together with the agreed cost according to the following schedule:
a. By 28th December, 2018 FASL pays to the Clients GHC300,000.00.
b. By 28th January, 2019 FASL pays to the Clients GHC400,000.00.
c. By 28th February, 2019 FASL pays to the Clients GHC400,000.00.
d. By 28th March, 2019 FASL pays to the Clients GHC230,000.00.
e. By 28th April, 2019 FASL pays to the Lawrence Bruce Kyei, the outstanding 40% on the interest on the investment Numbers 0311933 and 0311304 which was not included in the entry of judgment filed on 9th November, 2018.”
As I stated early on, the respondent is not a party to the agreement but it is apparent that his interest is a subject of the agreement. It goes without saying that the agreement is beneficial to him and the other clients of Darls Legal Consult. Counsel for the applicant, however, argued that since the respondent is not a party to the agreement he cannot enforce same or rely on the terms of the agreement. It is my respectful view that this argument flies in the face of section 5(1) of the Contracts Act, 1960 (Act 25). The section provides that “A provision in a contract made after the commencement of this Act which purports to confer a benefit on a person who is not a party to the contract, whether as a designated person or as a member of a class of persons, may, subject to this section and sections 6 and 7, be enforced or relied on by that person as though that person were a party to the contract.”
Thus, a person who seeks to enforce some rights under a contract of which he is not a party can only do so if the contract purports to confer some benefit on him, either as a designated person or as a member or as a class of persons. See EJURA FARMS (GHANA) LTD. & ANOR. V HARLLEY  1 GLR 158; KOAH V. ROYAL EXCHANGE ASSURANCE  GLR 398.
In the instant case, the respondent was not a party to the said agreement, but he can, under section 5(1) of the Contract Act, 1960(Act 25), enforce or rely on a benefit conferred on him under the agreement since the parties to the agreement intended conferring on him (respondent) such a benefit. The respondent can therefore rely on the admission made by the applicant that it is indebted to him to the tune of GHC 1,107,289.99. This admission has completely shattered the applicant’s assertion that it has a reasonable defence to the suit. It is instructive to note that the agreement (Exhibit 1) was executed few days after the respondent filed the entry of judgment. It is, therefore, not surprising that the admitted amount as captured in the agreement is a true reflection of the entry of judgment. Other steps taken by the applicant in the surrendering of its vehicles to respondent and the payment of GHC 50,000 as part payment of the debt also give effect to the admission made and completely whittles away any defence to the instant action.
Admission is defined by the 7th edition of the Black’s Law Dictionary as a voluntary acknowledgment of the existence of facts relevant to an adversary’s case. Justice Brobbey in his book, Essentials of Ghana Law of Evidence at page 112 explained admissions to mean the fact or issue which has been conceded and is no longer in contention. It was held in Samuel Okudzeto Ablakwa & Anor v Jake Obetsebi Lamptey & Anor [2013-2014] 1 SCGLR 16 that where a matter is admitted proof is dispensed with.
It is my considered opinion that an out of court admission borne out of a negotiated settlement agreement is as potent as an admission made in the course of a court proceeding. Exhibit 1 was not sanctioned by the court; it has not been adopted as consent judgment but its enforceability is guaranteed by section 5(1) of Act 25. This provision has modified the common law principle of privity of contract.
I agree with counsel for the applicant that access to justice is a constitutional right. Indeed, each person has the right to seek reliefs in court but his right to success is not guaranteed by the constitution. The applicant by its own showing per the terms of Exhibit 1 has demonstrated that it has no defence to the action. It has therefore failed to meet the requirements of the instant application.
On the entry of judgment, it is observed that the same was served personally on the respondent as stipulated under Order 7 rule 2 of CI 47. It was served on 9th November, 2018. The content of the entry of judgment has also been admitted by the applicant in Exhibit 1.
For the foregoing reasons, the application fails. The default judgment pronounced by the court on 2nd November, 2018 still stands. The court sanctioned execution process effected so far remain valid and the respondent is at liberty to continue with the process.
There will be no order as to costs.