IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
ACCRA - A.D 2018
GHANA GROWTH FUND LTD - (Plaintiff)
TANTRA HILLS ESTATES DEV. LTD AND COL KWAKU ADADE TAKYI - (Defendant)
DATE: 9 TH NOVEMBER, 2018
CIVIL APPEAL NO: CM/0310/2016
JUDGES: SAMUEL K. A. ASIEDU JUSTICE OF THE HIGH COURT
FREDRICK BOAMAH ESQ., FOR THE PLAINTIFF
ESTHER ASANTEWAA HANSON FOR DANIEL O. NYANPONG ESQ., FOR DEFENDANT
By a writ of summons issued on the 24th April 2016, the plaintiff herein claims against the defendants jointly and severally for:
a) An order for specific performance of the processing of the facility agreement between the Plaintiff and the Defendants in respect of the amount of Four Million Two Hundred and Twenty Six Thousand Seven Hundred and Eleven Ghana Cedis Seventeen pesewas (Gh¢4,226,711.17) paid to FBN Bank on behalf of the Defendants.
b) An order for the recovery of the sum of Four Million Two Hundred and Twenty Six Thousand Seven Hundred and Eleven Ghana Cedis Seventeen pesewas (GH¢4, 226,711.17) being the outstanding balance of the money paid on behalf of the Defendants to FBN Bank.
c) Interest on the Four Million Two Hundred and Twenty Six Thousand Seven Hundred and Eleven Ghana Cedis Seventeen pesewas (GH¢4,226,711.17) from 27th August 2015 at the rate of 48% per annum.
d) Cost including Legal fees.
After the entry of appearance, the defendants filed a defence which was later amended in which they counterclaimed against the plaintiff for:
i. General damages for breach of contract.
ii. Recovery of the sum of Gh¢ 772, 274.00 being the interest accrued on thenpurchase price from 15th June to 27th August 2015 at the prevailing commercial rate due to the delay in payment by Plaintiff.
iii. Costs including solicitors fees.
The facts of the case are that the 2nd defendant put up for sale his property situate at 23B Castle Road, Ridge, Accra. This very property was then a subject of a mortgage to FBN Bank. One Doctor and Mrs. Nduom, allegedly, expressed interest in the property and decided to acquire same. Negotiations were held and later, Doctor and Mrs. Nduom got the plaintiff, a company in which they have interest, to pay a sum of money to acquire the property. Some months after the sale and purchase of the property the plaintiff, alleging that it had paid more than the agreed price for the property, prepared a loan agreement in respect of the allege excess payment for the defendants to execute. When the defendants turned down their request the plaintiff instituted the instant action for the reliefs endorsed on its writ of summons. After the failure of pre-trial mediation, issues were set down for the consideration of the court; one of which is: whether or not the 1st defendant herein is a necessary party to the action and liable to the plaintiff on its claim. This issue stems out of an averment in the defendants’ defence in which the defendants contended in paragraph18 of their statement of defence that:
18. 1st Defendant says that it has no interest in the Property howsoever and was never a party to the sale and purchase of same and all dealings were with 2nd Defendant and the Bank and 1st Defendant says it has been wrongly joined to this suit.
In its response to the defendants’ averment in paragraph 18 as quoted above, the plaintiff, in paragraph 17 of its amended reply, denied the 1st defendant’s contention contained in paragraph 18 of the defence and stated that it shall put the defendants on strict proof of the said averment. The plaintiff then proceeded to say in paragraph 18 of its amended reply that “the debt paid off by the plaintiff were in the name of the 1st defendant and 1st defendant also offered its assurances to pay the difference in the amounts paid.” The parties agree and, particularly, the plaintiff has stated in its statement of claim that the 1st defendant is a limited liability company incorporated under the laws of Ghana and engaged in the business of estate development. The averment contained in paragraph 18 of the statement of defence is, in the opinion of the court, a negative averment by which the 1st defendant says that it has no interest in the property herein and was never a party to the sale and purchase agreement of the said property and that all dealings were with the 2nd defendant and the bank. By denying this averment therefore, the plaintiff is understood to assert the positive. That is to say, that the plaintiff is understood to aver that the 1st defendant has an interest in the property and was a party to the sale of the property and that the 1st defendant took part in all the dealings.
That being so, it is wrongful on the part of the plaintiff to seek to exact “strict proof” from the defendants. This is so because by seeking to exact strict proof from the defendants, the plaintiff is indirectly inviting the defendants to prove the negative which has never been the position of the law. The authors of Phipson on Evidence (18th edition), Published by Sweet & Maxwell, London U.K. (2013), states at page 161, paragraph 6-03 that “one effect of the burden of proof is that if the party bearing the burden has not pleaded a positive case, the other party need not plead and prove that alternative states of affairs do not exist.” See Seashore Marine SA vs. Phoenix Assurance Plc. (The Vergina) (No.1)  2 Lloyd’s Report 719. In Bank of West Africa Ltd. v. Ackun  1 GLR 176, at page 181 of the report, their Lordships agreed with the authors of Powell’s Principles and Practice of the Law of Evidence (10th ed.) that the “issue must be proved by the party who alleges the affirmative in substance, and not merely the affirmative in form.”
The court holds therefore that since it is the plaintiff who is making a positive assertion that the 1st defendant has an interest in the property 23B Castle Road, Ridge, Accra, and that the 1st defendant took part in the sale of the said property, then, it is the duty of the plaintiff to lead evidence to prove this assertion in accordance with the dictates of section 14 and 17 of the Evidence Act, 1975, NRCD 323. The court finds that the plaintiff has admitted in paragraph 5 of its statement of claim as well as paragraph 8 of the witness statement of Kwame Ofori Asomaning, the managing director of the plaintiff company, that the property in issue 23B Castle Road, Ridge, Accra belongs to the 2nd defendant which the 2nd defendant had used as a mortgage to secure a facility which the 1st defendant had contracted from FBN Bank. The evidence on record shows that the Sales and Purchase Agreement, exhibit B herein, in respect of 23B Castle Road, Ridge, Accra was executed between the plaintiff company and the 2nd defendant in his personal capacity. Further, the Deed of Assignment, exhibit J1 herein, in respect of the property in question, was executed between the plaintiff and the 2nd defendant in the personal capacity of the 2nd defendant.
It is clear therefore that the 1st defendant has no interest in the property in question and that true to the averment of the defendants, the 1st defendant played no role in the sale and purchase of the property in issue. The court also finds that, contrary to the assertion of the plaintiff, the negotiations leading to the sale and purchase of 23B Castle Road, Ridge, Accra, was factually between the plaintiff and the 2nd defendant, the owner of the said property. The plaintiff has alleged in paragraph 18 of its amended reply that the 1st defendant “offered its assurances to pay the difference in the amount paid” however, not a scintilla of evidence has been offered by the plaintiff to prove this allegation.
Exhibit D which the plaintiff referred to in its evidence, is a letter written by the 2nd defendant in his personal capacity and not on behalf of the 1st defendant. The fact that it was written on the letter head of the 1st defendant alone cannot fix the 1st defendant with liability for an alleged debt arising out of the sale of a property which belongs to the 2nd defendant in his personal capacity. To argue otherwise will derogate from the principle of the separation of the activities of owners or shareholders of limited liability companies from the activities of the companies themselves as espoused in cases like Salomon vs. Salomon & Co  AC 22; [1895-99] All ER Rep 9 and Morkor vs. Kuma (NO 1) [1999-2000] 1 GLR 721. Consequently, the court will hold that the 1st defendant is not a proper and a necessary party to the instant action. The court will therefore exercise its powers under Order 4 rule 5 (2)(a) of the High Court (Civil Procedure) Rules, 2004, CI 47 to strike out the name of the 1st defendant from the suit for the reason that the 1st defendant is not a proper and a necessary party to the instant action.
From the pleadings and the evidence on record, the court finds that the parties are ad idem that the 2nd defendant put up his property situate at 23B Castle Road, Ridge, Accra for sale sometime in the year 2015. The court further finds that at the material time that the said property was put up for sale, the same was the subject of a mortgage by the 2nd defendant to FBN Bank to secure a facility which FBN Bank had extended to the 1st defendant; a company in which the 2nd defendant was a shareholder and the managing director. There is undisputed evidence on record that property number 23B Castle Road, Ridge, Accra was eventually purchased by the plaintiff herein who paid the purchase price thereof to FBN Bank to offset part of the facility which the said bank had extended to the 1st defendant company.
One of the main issues for determination is whether number 23B Castle Road, Ridge, Accra was sold for GH₵11,400,000.00 or GH₵13,500,000.00. This is so because throughout its pleadings, the plaintiff has maintained that the agreed price for number 23B Castle Road, Ridge, Accra between the parties was fixed at GH₵11, 400,000.00 whereas the 2nd defendant also contends that the agreed price for the property was fixed at GH₵13, 500,000.00. The evidence of the plaintiff is that after negotiating with the 2nd defendant, the parties agreed that the sale and or purchase price for number 23B Castle Road, Ridge, Accra was GH₵11,400,000.00. The plaintiff tendered the Sales and Purchase Agreement, exhibit B as well as a Deed of Assignment, exhibit J1 herein, in evidence. The said Sales and Purchase Agreement, exhibit B, tendered by the plaintiff clearly does not bear the date it was executed by the parties. Exhibit B purports to state the amount of GH₵11,400,000.00 as the agreed price of the property. Exhibit B being an agreement for tthe e sale of land is required, by the first schedule to the Stamps Act, 2005, Act 689, as stated in section 1(1) of the Act, to be stamped. Realising the defect in exhibit B, the plaintiff purports to remedy the situation after the close of the hearing and after the parties have filed their addresses, by filing a motion for an order of the court to substitute or replace exhibit B with a different Sales and Purchase Agreement which purports to have been stamped by the plaintiff.
The said motion was opposed by the defendant who argued that it is too late in the day for the plaintiff to seek to remedy the defects in exhibit B. Notwithstanding the fact that exhibit B bears no date of execution, it is on record that the said exhibit was executed in May 2015. The court has examined the exhibit attached to the motion paper which the plaintiff seeks to replace the Sales and Purchase Agreement tendered in evidence and the court finds that the document does not disclose the date on which it was, allegedly, stamped by the plaintiff herein contrary to the requirement of section 4(5) of Act 689. Again, the said document attached to the motion does not comply with section 6 of the Act which requires that facts and circumstances that affect liability to stamp duty must be stated on the instrument.
Further, the court has noted that under section 12(1) of Act 689, an instrument such as the Sales and Purchase Agreement in this matter is required to be stamped within two (2) months after it has been executed and that where it is not so stamped, then section 12(2) of the Stamps Act permits it to be stamped only after the payment of the required duty and a penalty. Under section 12(5) the fact of the payment of the penalty ought to be denoted on the instrument. Indeed, despite the fact that the document attached to the motion paper was executed in May 2015 and purported to be stamped in 2018, there is no indication on the said document that a penalty was paid before it was allegedly stamped and thus, it fails to meet the requirements of the Stamps Act, 2005, Act 689. For all the reasons stated above therefore the court is of the opinion that the said document attached to the motion paper is virtually worthless and can, therefore, not be admitted to replace the unstamped Sales and Purchase Agreement, exhibit B herein.
Under section 32 of Act 689, a party who seeks to tender in evidence an instrument which requires to be stamped, is under an obligation to stamp such instrument before the court may consider admitting same in evidence. Where the instrument is not stamped appropriately, the necessary stamp duty as well as the penalty may be paid to the Registrar of the court and thereafter the court may admit same in evidence. Thus, where such instrument is not stamped as required by the Act, the same cannot be admitted in evidence. Thus, in Lizori Ltd. vs. Boye & School of Domestic Science & Catering [2013- 2014] SCGLR 889, the court held, among others, that:
The provision in section 32 of Act 689, was so clear and unambiguous and required no interpretation. Either the document has been stamped and appropriate duty paid in accordance with the law in force at the time it was executed or it should not be admitted in evidence. There was no discretion to admit it in the first place and order the party to pay the duty and penalty after judgment. Thus the trial court would have been perfectly justified to reject the receipts without stamping.
In the instant matter not only is exhibit B not stamped but the plaintiff has failed to comply with the requirements stated in section 32 of Act 689. That being so, exhibit B cannot be considered by the court in arriving at its decision. The said exhibit is therefore of no probative value. The 2nd defendant has given evidence to the effect that after the preparation of both exhibit B, the purported Sales and Purchase Agreement as well as exhibit J1, the Deed of Assignment, the plaintiff, through its witness Kwasi Owusu Ansah who prepared the said Sales and Purchase Agreement and the Deed of Assignment, submitted to the 2nd defendant only the signatory portion of the instruments for his execution, thus; according to the plaintiff, the entire documents were not given to him to sign. The plaintiff’s witnesses dispute this piece of evidence and have testified that after the drafting of the instruments, the managing director of the plaintiff together with Kwasi Owusu Ansah took the said instruments to the 2nd defendant and explained the documents to the 2nd defendant line by line and took notice of inputs made by the 2nd defendant. Later, when the documents were submitted to the 2nd defendant for his signature, he delayed in signing them therefore Kwasi Owusu Ansah went for the documents leaving the signatory portions with the 2nd defendant till a later date when the 2nd defendant invited him to come for them after he and his wife had signed them.
The court finds the evidence of the said Kwasi Owusu Ansah as narrated on the execution of the documents to be improbable especially in view of the fact that the said documents without the signatory portions are of no value and therefore there is no tangible reason for the plaintiff’s agents to go and collect the documents minus the signatory portions from the 2nd defendant. On the other hand, the testimony of the 2nd defendant that only the signatory portions were handed over to him is more probable and it is supported by exhibit KAT 10 tendered by the 2nd defendant herein. The reason for giving to the 2nd defendant only the signatory portions is obvious from the documents, particularly exhibit J1. Exhibit J1 is dated the 22nd May 2015. There is evidence on record that the plaintiff and the 2nd defendant initially agreed on a price of GH₵11,400,000.00 for property number 23B Castle Road, Ridge, Accra. The plaintiff has testified that after the initial agreement, the plaintiff, the 2nd defendant and representatives of FBN Bank held another meeting at which the price of GH₵11,400,000.00 was rejected by both the 2nd defendant and the mortgagee of the property, FBN Bank herein. This evidence was given by the plaintiff in paragraph 15 of the witness statement of the managing director of the plaintiff company and exhibit C, which is the same as exhibit G, dated 14th May 2015, was written to indicate the amount of GH₵13,500,000.00 as the price at which property number 23B Castle Road, Ridge, Accra will be sold by the 2nd defendant and FBN Bank.
Subsequently, the plaintiff wrote exhibit H, dated the 29th July 2015, to accept the amount of GH₵13,500,000.00 as the price of property number 23B Castle Road, Ridge, Accra. It implies therefore that, at least, on the 22nd May 2015, when the Deed of Assignment was prepared, the plaintiff was aware that the final agreed price of the property was GH₵13,500,000.00 and not GH₵11,400,000.00. This explains the reason why the Deed of Assignment was not given to the 2nd defendant except the signatory portion in order that the 2nd defendant may not see the figure of GH₵11,400,000.00 which has been inserted into exhibit J1 and written with the hand together with the date whiles all the other writings, with the exception of part of the oaths and the signature, were typewritten. If it is true, as the plaintiff would want the court to believe, that the final agreed sale/purchase price of the property was GH₵11,400,000.00, then one would expect the plaintiff to reject the price of GH₵13,500,000.00 which was quoted for the property by the 2nd defendant and FBN Bank at the meeting held on the 5th May 2015. Again, if it is true that the agreed price for the property was GH₵11,400,000.00, then one would expect the plaintiff to sue the 2nd defendant for the relief of specific performance when a different price was quoted at the meeting of 5th May 2015. The plaintiff did not do any of these but rather wrote a letter, exhibit H herein, on the 29th July 2015, to accept the price of GH₵13,500,000.00. However, the plaintiff gave an explanation as to why exhibit H was written by the plaintiff. The court will come back to exhibit H and examine it in detail later in this judgment. Suffice it to say however that the court is satisfied that the agreed and final price at which property number 23B Castle Road, Ridge, Accra was sold is GH₵13,500,000.00 instead of GH₵11,400,000.00.
RIGHT OF FBN BANK TO REVIEW PRICE:
One issue that has drawn attention of the parties in the matter is whether or not FBN Bank, as a mortgagee, has the right to review the original price of GH₵11,400,000.00 agreed between the plaintiff and the 2nd defendant. The 2nd defendant does not dispute that initially the price that was agreed between him and the plaintiff was GH₵11,400,000.00. The evidence on record shows that at the meeting held on the 5th May 2015, this initial price was reviewed to GH₵13,500,000.00 at which the property was finally sold to the plaintiff. The minutes of the meeting held on the 5th May 2015 was tendered in evidence as exhibit G. It is not in dispute from the evidence on record that the property in question is owned by the 2nd defendant and that the 2nd defendant used the property to secure a facility on behalf of the 1st defendant.
A critical reading of exhibit G would show that it was not only FBN Bank that decided to review the price from GH₵11,400,000.00 to GH₵13,500,000.00 but that the 2nd defendant himself, who was described therein as “Tantra Hill” took part in the decision to review the price. Therefore, even if it could be validly argued that being a mortgagee, FBN Bank had no right to review the price initially agreed between the plaintiff and the 2nd defendant, the same argument cannot be validly made in respect of the 2nd defendant who is the owner of the property in question. In reviewing the price, various reasons including the debt owed by the 1st defendant to FBN Bank and the market price of the property was taken into consideration and this fact is very clear from exhibit G which was written on the 14th day of May 2015.
It is provided in section 12(1) of the Mortgages Act, 1972, NRCD 96 that
(1) Unless a contrary intention appears expressly or by necessary implication, a mortgagor may transfer all or a part of the mortgagor’s interest in the mortgaged property without the concurrence of the mortgagee.
The main purpose for the creation of the mortgage in question was to enable FBN Bank realize the mortgage property, in case of default on the part of the mortgagor, to satisfy the facility made available to the 1st defendant for which the property was used as security. It is for this reason that the property was valued by the parties to the mortgage to ensure that it was capable of satisfying the debt created. It implies therefore that the right of the mortgagee to contribute to the determination of the price at which the property shall be sold arises by necessary implication as envisaged under section 12(1) of NRCD 96 in order that the mortgagee’s interest in the property, as a security for the facility given, is not jeopardized. The exercise of that right by the mortgagee can, therefore, not be viewed as interfering with the right of the owner of the property. In taking part in the determination of the price at which the property was sold, the mortgagee exercised a right that arose by necessary implication, from the very existence of the mortgage. That right was not exercised in the capacity of an owner.
REPAYMENT OF PART OF PURCHASE PRICE:
The evidence on record shows that after the meeting of 5th May 2015 which resulted in the writing of exhibit G, the 2nd defendant “promised to contact the officials of Ghana Growth Fund Company to negotiate for an upward review of their offer price from US$3m to US$3.5m and revert to the Bank with a response” Following the above, the court finds that, the 2nd defendant, in order to entice the plaintiff to pay the price of the property, wrote exhibit D to the plaintiff; in which the 2nd defendant urged the plaintiff to pay the agreed price of GH₵13,500,000.00 to FBN Bank with the promise that the 2nd defendant regarded the initial price of GH₵11,400,000.00 as valid and that in future, the 2nd defendant was prepared to pay the difference between the GH₵13,500,000.00 and the GH₵11,400,000.00. The court finds that the 2nd defendant even went ahead to indicate the sources from which he will repay the difference to the plaintiff. The said exhibit D written by the 2nd defendant states, among others, that:
On the FBN BANK LTD reply dated 28 May 2015 on the immediate release of collateral and deed of discharge documents, for the subject property, we wish to accept that you pay to FBN BANK LIMITED , an amount of GH¢13,500,000.
The INITIAL AGREEMENT WITH GHANA GROWTH FUND LIMITED is still valid for the consideration of GH¢11,400,000 we are prepared in future to pay any difference.
Firstly, from the sale of the WAREHOUSE and plot of land, with a total area of 2.17 acres to GHANA GROWTH FUND LIMITED.
In addition, we wish to pay any difference to GHANA GROWTH FUND from the RENT receivable from our tenants namely:
VODAFONE GHANA LIMITED SUBAH LIMITED
ENERGY BANK LIMITED
Finally, it is our fervent hope that before the above sale of the two properties, GHANA GROWTH FUND LIMITED will pay FBN BANK LIMITED any outstanding principal loan and all interests as indicated on attached letter dated 29 May 2015, so that all our collaterals and deeds of discharge on all our five properties will be deposited with GHANA GROWTH FUND LIMITED.
Is our hope that all action on the requests will be concluded by 15 June 2015, as indicated by FBN Bank Limited.
Thanking you in advance for your anticipated prompt action on the above humble requests.
The 2nd defendant made admission to this effect in the following answers toquestions under cross examination:
Q: On the 1st of June, 2015, you wrote a letter on the letter head of 1st deft and duly signed by you requesting that the Plaintiff should agree to pay that 13.5 million cedis and assuring the plaintiff that the agreed purchase price of 11.4 million cedis for the purchase of property No. 23 castle road was still valid. Is that true or not?
A. I wrote that letter.
Q: So you knew that your agreement with the Plaintiff for the purchase of the property No. 23 was 11.4 million cedis and not 13.5 million cedis. You knew that?
A. I knew the facts.
Q. You were therefore not telling the court the truth when you said that your agreement with the plaintiff had changed from 11.4 to 13.5 million.
A. I have been telling the court the truth. The 11.4 million cedis, on the 5/5/15 was what Dr. Paa Kwesi Nduom and Mr. Asumaning and I agreed on. That was the 11.4 million cedis but the whole scenario changed when the FBN bank gave the ultimatum that it would only accept the 13.5 million to release all documents in its custody to Dr. Paa Kwesi Nduom and Mr. Asumaning on 23 castle road.
The court finds that as a consideration for this offer made by the 2nd defendant to the plaintiff, the plaintiff, finally, agreed to pay the sum of GH₵13,500,000.00 to FBN Bank with the understanding that the difference between the GH₵13,500,000.00 and the GH₵11,400,000.00 will be repaid to the plaintiff by the 2nd defendant. The court is of the opinion that the promise or offer contained in exhibit D and the subsequent acceptance of the said offer by the plaintiff manifesting in the agreement to pay GH₵13,500,000.00 for the property, constitute a fresh contract between the plaintiff and the 2nd defendant which the plaintiff has every right to enforce same against the 2nd defendant. The court will hold therefore that the 2nd defendant is liable to the plaintiff for the difference between the two sums of money which, by elementary calculation, amounts to GH₵2,100,000.00
There is evidence on record that an amount of GH₵2,126,711.17 was paid by the plaintiff on behalf of the 2nd defendant. This is captured by exhibit A, a cheque for the amount in question and exhibit A1, a letter acknowledging receipt of the payment addressed to the 2nd defendant. The issue surrounding this payment is whether or not it formed part of the purchase price and whether the plaintiff ought to recover this amount from the 2nd defendant. Exhibit A shows clearly that this payment was made on the 8th May 2015; that is, three days after the meeting of 5th May 2015 at which the purchase price of the property was revised from GH₵11,400,000.00 to GH₵13,500,000.00. The managing director of the plaintiff has given evidence in paragraph 11 of his witness statement that the amount was paid on the 12th May 2015 but the cheque, exhibit A, shows that it was issued on the 8th and not 12th May 2015. The plaintiff has given evidence that whiles negotiations were ongoing, FBN Bank threatened to call in their investment as a result of the default of the defendants to pay interest on the facility. The plaintiff tendered exhibit F and F1 in support. It must be placed on record that although exhibit F is a demand letter from FBN Bank on the defendants, at the date of the letter, that is, 31st March 2015, no relationship had developed between the plaintiff and the defendants. The second demand notice, exhibit F1, was written by the bank on the 4th May 2015 by which time, according to the plaintiff, the negotiations for the purchase of the property had started.
It is therefore not altogether correct to say that it was during negotiations that the bank threatened to call in the facility. In the witness statement of the managing director of the plaintiff, particularly at paragraph 10 and 11, the plaintiff gave two reasons why it paid the sum of GH₵2,126,711.17 to the defendant. The first reason given is that the amount was paid “as part of the purchase price to forestall FBN Bank’s action.” The second reason is that it was paid “to save the business of the defendants.”
In respect of the second reason given for the payment of the sum of GH₵2,126,711.17 to the defendant, the evidence on record is that the property in respect of which the amount was paid was the subject of a mortgage and that steps were being taken to sell the property by the owner in order to defray debts owed by the 1st defendant. How the payment of the money was meant “to save the business of the defendants” is not clear to the court because since the property was used as a security one of the options opened to the mortgagee, upon default by the mortgagor was to exercise the rights given to the mortgagee under section 15 of NRCD 96 which states that:
15. Remedies of mortgagee on default
On the failure of performance of an act secured by the mortgagee may
(a) Sue the mortgagor or obligor or both of them on a personal covenant to perform, or
(b) Realise the mortgagee’s security in the mortgaged property in all or any of the ways provided in this Act and in no other despite a provision to the contrary in the mortgage.
Therefore, since the mortgagee has a right to realise the property in an action for judicial sale under section 18 of NRCD 96, the court wonders how the business of the defendants was to be saved by the payment of the sum of GH₵2,126,711.17 in a bid to purchase the property which had been put up for sale nonetheless.
The other reason given for the payment of the money was that it was meant “as part of the purchase price.” It is clear from the evidence that on the 8th of May 2015 when the sum of GH₵2,126,711.17 was paid, the parties did not have any concrete agreement in respect of the sale and purchase of the property. It is clear from the minutes of the meeting of 5th May 2015, exhibit G herein, dated the 14th May 2015 that the initial price of GH₵11,400,000.00 had been rejected by the 2nd defendant and FBN Bank. The letter, exhibit G, shows clearly that FBN Bank had intimated its readiness to sell the property to anybody who was willing to pay the price of GH₵13,500,000.00 for the property. There is also unchallenged evidence on record by the 2nd defendant that many prospective buyers had expressed interest in the property. The money, as stated, was paid on the 8th May 2015. Now the question that comes up naturally is that since there was no agreed price on the 8th May 2015, when the amount was paid, against which purchase price was the sum of GH₵2,126,711.17 paid?
The 2nd defendant’s evidence on this issue is clear: He testified at paragraphs 10 and 11 of his witness statement that:
10. I impressed it upon the Plaintiff that since I used the Office Complex and others (my personal property) to secure the said loan facility which the Bank was threatening to call in if, at least, the interest amount of Gh¢2,126,711.17 was not settled immediately, time was of essence so I wanted to consider other prospective buyers who had also called on telephone to make enquires.
11. Desirous to lock down the transaction for itself alone, pending a re-consideration of the outcome of the 5th May, 2015 meeting and to prevent the calling in of the said loan facility, the Plaintiff issued a GN Bank cheque No. 025724 dated 8th May 2015 for the amount GH¢2,126,711.17 as commitment fee and I issued a written acknowledgement of the money. I then promptly paid the cheques to the Bank. A copy of the cheques and the written acknowledgement are attached hereto and marked respectively as Exhibit KAT 4 & Exhibit KAT5.
In the opinion of the court, the evidence of the 2nd defendant is more logical and dovetails naturally into the trend of events. The 2nd defendant says that the sum of money under discussion was paid by the plaintiff as a commitment fee so that the 2nd defendant will keep the property up for the plaintiff and not sell it to any other person in the meantime as the plaintiff considers the fresh proposal to sell same for GH₵13,500,000.00. On both exhibit A and A1, there is nothing to show that the sum was paid as “part of a purchase price.” Even in exhibit B, the Sale and Purchase Agreement, there is no mention of the payment of the sum of GH₵2,126,711.17 as part of the purchase price. Although exhibit B is not dated, paragraph 4 of the said exhibit gives an indication as to the date that it was executed. Paragraph 4 of exhibit B states that:
DOCUMENTS TO BE EXECUTED
The Vendor shall execute these documents in favour of the Purchaser on the date of executing this Agreement:
a. Deed of Assignment.
b. A letter to Lands Commission for its consent to assign his Interest in the Property.
From the above paragraph, it is clear that the parties agreed that on the date of execution of exhibit B, the 2nd defendant shall also execute a Deed of Assignment and a letter requesting the consent of the Lands Commission. Exhibit 10 is a note written by one Owusu Ansah, a witness of the plaintiff, in which he acknowledged receipt of the signatory portions of the Sales and Purchase Agreement, the Deed of Assignment as well as the letter requesting the consent of the Lands Commission. It implies therefore that true to the agreement in exhibit B, the 2nd defendant, the vendor of the property, in fact executed the said documents on the same day. Exhibit J1 is the Deed of Assignment and it is clear from the said exhibit that it was executed on the 22nd May 2015 by which time the amount of GH₵2,126,711.17 had long been paid. Yet, the said payment was never recorded as part-payment of the purchase price. Although the plaintiff recorded in exhibit J1 that by the 22nd May 2015, an amount of GH₵11,400,000.00 representing the purchase price had been paid, the evidence on record shows clearly that that statement is palpably false. This is so because, it was on the 29th July 2015, that the plaintiff wrote exhibit H in which it finally agreed to buy the property at GH₵13,500,000.00, according to the plaintiff, pursuant to the letter of the 2nd defendant written on the 1st June 2015, exhibit D herein, in which the 2nd defendant promised to repay the difference between the sum of GH₵13,500,000.00 and GH₵11,400,000.00 to the plaintiff. Clearly, the plaintiff and its witnesses have not been truthful and candid to the court on this issue.
Further, there is clear evidence from the swift transfer tendered by the plaintiff, exhibit E herein, as well as exhibit E1, a letter from FBN Bank to the plaintiff, all to the effect that the final purchase price of GH₵13,500,000.00 was paid in August 2015 and not in May 2015 as the plaintiff would want the court to believe. Indeed, the court can say, without a shred of doubt, that exhibit J1, the Deed of Assignment, has some element of fraud about it, particularly, as far as the date of execution and the amount stated therein as the purchase price are concerned.
Indeed, exhibit J1, the Deed of Assignment, is a fraudulent document cooked up by the plaintiff and it is therefore not reliable. No wonder therefore that the 2nd defendant contends that the whole documents, that is; the Sales and Purchase Agreement, exhibit B herein, as well as the Deed of Assignment, exhibit J1 herein, were not surrendered to him by the plaintiff to enable him to read them but that the plaintiff, fraudulently, presented to him, the 2nd defendant, only the signatory portions. These exhibits, as noted above, were, therefore, procured by fraud and deceit.
Nonetheless, nowhere in these documents is it recorded that the sum of GH₵2,126,711.17 was paid as part of the purchase price of the property. The law is clearly stated in Bank of West Africa Ltd vs. Ackun  1 GLR 176, that
“The onus of proof in civil cases depends upon the pleadings. The party who in his pleadings raises an issue essential to the success of his case assumes the burden of proof.”
Again, in Ababio vs. Akwasi III [1994-1995] GBR 774 the court pointed out that:
“A party whose pleading raised an issue essential to the success of the case assumed the burden of proving such issue. The burden only shifted to the [other party] when [such a party] had adduced evidence to establish the claim”
These judicial decisions are reinforced by sections 14 and 17 of the Evidence Act, 1975, NRCD 323 which provides that:
14. Allocation of burden of persuasion Except as otherwise provided by law, unless it is shifted a party has the burden of persuasion as to each fact the existence or non-existence of which is essential to the claim or defence he is asserting.
17. Allocation of burden of producing evidence Except as otherwise provided by law,
(a) the burden of producing evidence of a particular fact is on the party against whom a finding on that fact would be required in the absence of further proof;
(b) the burden of producing evidence of a particular fact is initially on the party with the burden of persuasion as to that fact.
The court will therefore hold that as far as the claim for the recovery of the sum of GH₵2,126,711.17 as part payment of the purchase price is concerned, the plaintiff carried the burden to satisfy the court that the said sum was paid towards the purchase price and not as commitment fee and that the plaintiff has woefully failed to lead evidence to prove this claim against the 2nd defendant.
Flowing from the issue just discussed, the plaintiff has given evidence to the effect that it agreed to grant as a loan to the 2nd defendant, the sum of GH₵2,126,711.17 and the difference between the GH₵13,500,000.00 and the GH₵11,400,000.00 which is GH₵2,100,000.00. The plaintiff says therefore that it prepared a facility agreement, after the sale of the property, for the execution of the 2nd defendant who refused to sign. The plaintiff therefore prays the court for an order of specific performance of the said facility agreement. The two sums put together come to GH₵4, 226,711.17.
Suffice it to say that the plaintiff has not proved any facility agreement with the 2nd defendant. Indeed, there is not a scintilla of evidence to show that the 2nd defendant went to the plaintiff to borrow any money. The plaintiff has failed to prove any such contract with the 2nd defendant. What the plaintiff has been able to prove is that the 2nd defendant promised to repay to the plaintiff the difference between the sum of GH₵13,500,000.00 and the sum of GH₵11,400,000.00 which is GH₵2,100,000.00. Even then, exhibit D upon which the plaintiff rely does not indicate when the repayment is to begin and neither does it state that the amount ought to be paid with interest. It is therefore wrong for the plaintiff to prepare a facility agreement, exhibit M herein, as it claims to have done in paragraph 21 of its witness statement, on the sum of GH₵4, 226,711.17 and seek to claim interest thereon at the rate of 48% and then invite the 2nd defendant to sign same. The court holds that the plaintiff is not entitled to claim any such sum from the 2nd defendant. What the plaintiff is entitled to recover from the 2nd defendant is the sum of GH₵2,100,000.00. The court will therefore enter judgment for the plaintiff against the 2nd defendant to recover the sum of GH₵2,100,000.00.
As already stated, the defendant has also counterclaim against the plaintiff for:
(i) General damages for breach of contract
(ii) Recovery of the sum of GH₵772,274.00 being the interest accrued on the purchase price from 15th June to 27th August 2015 at the prevailing commercial rate due to the delay in the payment by the plaintiff
(iii) Costs including solicitor’s fees.
The above counterclaim is based on allegations contained in the defendants’ amended statement of defence, particularly, from paragraph 27 to paragraph 33A. All the allegations leading to the counterclaim by the 2nd defendant have been denied by the plaintiff in its reply and therefore the onus falls on the 2nd defendant to lead cogent evidence to prove them if he is to succeed on his counterclaim.
The 2nd defendant alleges that he agreed with the plaintiff that the plaintiff will purchase property number 23B Castle Road, Ridge, Accra in addition to a Warehouse and a plot of land which belong to the 2nd defendant.
The 2nd defendant seeks general damages for breach of contract. The 2nd defendant says that the plaintiff refused to buy the Warehouse and, thus, breached the agreement in that regard. The 2nd defendant therefore seeks damages from the plaintiff for the alleged breach. According to the 2nd defendant, the agreed price for the Warehouse was GH₵15,000,000.00. The 2nd defendant, at paragraph 17 of his witness statement, mentioned exhibit KAT 8 as the agreement on the purchase of the Warehouse. Exhibit KAT 8 is the same as exhibit D tendered by the plaintiff herein.
The court has examined exhibit KAT 8 and the court finds that the said exhibit is not an agreement between the plaintiff and the 2nd defendant in which the plaintiff agreed to buy and the 2nd defendant agreed to sell the Warehouse to the plaintiff as contended by the 2nd defendant. Rather, exhibit KAT 8 is a letter written by the 2nd defendant to the plaintiff on the 1st June 2015 in which the 2nd defendant urged the plaintiff to buy property number 23B Castle Road, Ridge, Accra at the price of GH₵13,500,000.00 with a promise by the 2nd defendant to pay to the plaintiff, the difference between the sum of GH₵13,500,000.00 and the sum of GH₵11,400,000.00 which is the original purchase price of the said property agreed upon between the plaintiff and the 2nd defendant. The court also finds from exhibit G, the minutes of the meeting held on the 5th May 2015 by the plaintiff, the 2nd defendant and FBN Bank that the only property that the plaintiff agreed to purchase from the defendant was property number 23B Castle Road, Ridge, Accra. Nowhere in exhibit G is it mentioned that the plaintiff also agreed to buy the Warehouse of the 2nd defendant. The court holds therefore that the 2nd defendant has failed to adduce evidence to prove his claim that the plaintiff breached an agreement to buy the Warehouse as a result of which he is entitled to damages for breach of contract. The counterclaim for damages for breach of contract filed by the defendants is therefore dismissed.
The 2nd defendant has also counterclaim for the recovery of the sum of GH₵772,274.00 being the interest accrued on the purchase price from 15th June to 27th August 2015 at the prevailing commercial rate due to the delay in the payment by the plaintiff The court finds that it was on the 5th May 2015 that the sum of GH₵13,500,000.00 was mentioned by the 2nd defendant and FBN Bank, at a meeting with the plaintiff, as the final price that they will be willing to sell property number 23B Castle Road, Ridge, Accra to the plaintiff. This was reiterated in a letter dated 14th May 2015 and addressed to the 2nd defendant by the bank as shown by exhibit G herein. The court has already found that on the 8th of May 2015, the plaintiff paid a commitment fee of GH₵2,126,711.17 to the 2nd defendant. This commitment fee was paid after the meeting of the 5th May 2015 where the new price of GH₵13,500,000.00 was demanded by the 2nd defendant and FBN Bank. The court holds therefore that the payment of the commitment fee by the plaintiff signifies the plaintiff’s acceptance of the purchase price of GH₵13,500,000.00. Therefore exhibit 14 dated the 29th July 2015 which purports to accept the figure of GH₵13,500,000.00 as the purchase price of the property, among others, is only a written confirmation of the plaintiff’s acceptance of the purchase price quoted at the 5th May 2015 meeting of the parties.
There is ample evidence on record that the plaintiff had all along been aware that the 2nd defendant was selling his property number 23B Castle Road, Ridge, Accra to enable him settle the indebtedness of the 1st defendant with FBN Bank for which reason time was of utmost importance considering that interest was running on the debt against the defendants. There is sufficient evidence on record to the effect that as a result of the payment of the commitment fee, the 2nd defendant handed over the property to the plaintiff on the 14th May 2015 as shown by exhibit KAT 9 as well as the video clip which was tendered and viewed by the court. The managing director of the plaintiff admitted during cross examination that the plaintiff started renovation works on the property after it had been handed over to them by the 2nd defendant on 14th May 2015. The court finds that the plaintiff instructed the 2nd defendant to inquire, by exhibit KAT 11, whether FBN Bank will be ready and willing to release the documentation on the property to the plaintiff once the price of GH₵13,500,000.00 was paid. There is yet unchallenged evidence that FBN Bank replied by writing exhibit KAT 12 to the 2nd defendant expressing their readiness and willingness to release the documents to the plaintiff upon the receipt of the price of the property. Again, the managing director of the plaintiff company admitted, under cross examination, that the 2nd defendant brought exhibit KAT 12 to the notice of the plaintiff. Exhibit KAT 12 is dated the 16th of June 2015. The court finds that despite all these assurances the plaintiff continued to delay on the payment of the purchase price and yet held onto the property and continued with the renovation works whiles interest on the debt continued to accumulate against the defendants. As a result, the FBN Bank wrote exhibit 13 expressing its displeasure with the conduct of the plaintiff and later, threatened to sell the property to whoever was willing to pay the purchase price. The court finds from the evidence on record that it was on the 27th August 2015 that the plaintiff paid the purchase price to FBN Bank after occupying the property for a period of over three months from the 14th May 2015 when the property was handed over to them by the 2nd defendant. The managing director of the plaintiff company admitted, during cross examination, that interest will be running on the purchase price from May 2015 when the plaintiff took possession of number 23B Castle Road, Ridge, Accra till the date of payment on the 27th August 2015.
The court holds therefore that it is only fair that the plaintiff pays to the 2nd defendant the sum of GH₵772,274.00 which is reckoned to be the accumulated interest on the purchase price till the date when the said purchase price was actually paid by the plaintiff to FBN Bank. Accordingly, the court will grant to the 2nd defendant its counterclaim for the recovery of the sum of GH₵772,274.00. The court has decided that it will award no cost to either the plaintiff or the 2nd defendant since each of them has had judgment on some of their claims.
The court will however award cost of GH₵10,000.00 in favour of the 1st defendant against the plaintiff.