IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
ACCRA - A.D 2018
JIDEM SECURITY LTD - (Plaintiff)
BULK OIL STORAGE & TRANSPORTATION - (Defendants)
DATE: 23 RD APRIL, 2018
SUIT NO: CM/0134/15
JUDGES: HIS LORDSHIP ERIC KYEI BAFFOUR JUSTICE OF THE HIGH COURT
Plaintiff claim the following reliefs endorsed on its writ issued against the Defendant the following:
1. An order for the payment of the sum of €33,390.71 or its cedi equivalent which the Defendant owes the Plaintiff
2. Interest on relief (1) above from the 11th of August, 2015 till date of final payment.
3. Damages for breach of contract
5. Any other relief as this honourable court may deem just.
In a 39 paragraph statement of claim Plaintiff avers that it won a bid to provide services for the installation and maintenance of a closed circuit television system (CCTV) at the Defendant’s depot at the Accra Plains for an amount of €412,348.15 (Four Hundred and Twelve Thousand Three Hundred and Forty Eight Pounds and Fifteen Pence). And that as part of the terms of the contract 75% of the contract price had to be paid before order and installation or the receipt of advanced payment guarantee from a reputable insurance company with 25% of the amount to be paid upon the issuance of a certificate of completion by the supplier.
To Plaintiff it complied with the terms of the contract by providing an advance mobilization guarantee and a performance bond from SIC Insurance Ltd. Plaintiff claim that Defendant delayed for several months in paying the 75% of the contract sum which also delayed the performance of the contract leading to the completion of the project on the 4th of April, 2014. That upon completion it wrote to notify Defendant and informed Defendant of the need for adequate security to ward of threats to the safety of the installation and of the need for the training of Defendant’s personnel on the use of the facility. Plaintiff avers that notwithstanding the execution of the project and the handing over to it of the substantial completion certificate, Defendant has been unwilling to pay the outstanding contract sum on the spurious claim that there were defects, which said claim Plaintiff had confirmed to be the tempering of the equipment by Defendant’s own employees. It was agreed between the parties that Plaintiff will repair the damage after receipt of the outstanding amount of £82,469.63 from the Defendant. A letter was subsequently received from the Defendant of its instructions to their bankers to transfer the amount less withholding tax into Plaintiff’s account only to be informed later that Defendant was unable to carry through that instructions on the grounds that the Bank of Ghana’s regulation did not support the payment of foreign currency to local content.
Plaintiff contends that Defendant succeeded in transferring a cedi amount of GH¢400,001 which amounted to £65,573.93 leaving an amount of £12,772.22 which Defendant has failed to pay after several calls on him to pay. Finally Plaintiff claim that with the expiration of the defect liability period the 5% of the contract price amounting to £20,618.49 has also not been paid and hence the claims before the court.
STATEMENT OF DEFENCE OF DEFENDANT
Defendant in its amended statement of defence has denied the essential claims of the Plaintiff. Defendant claim that Plaintiff unduly delayed in informing Defendant of the revised work schedule after the receipt of the advance payment and hence this extended the completion of the works by nine months. And that at various meetings with Plaintiff it was pointed out to Plaintiff several outstanding works that had not been done the reason for which Defendant could not have taken over the project. And per the terms of the contract the 5% retention amount was to be released after all outstanding works had been completed by the Plaintiff.
To Defendant as it complained of several defects in the works done by Plaintiff causing a joint inspection of the works, Plaintiff agreed to remedy all the defects in the works it did. Defendant contend that the rate of exchange it used at the time was the Bank of Ghana exchange rate on the date of processing of the payment. And that Plaintiff has breached the agreement reached as it failed to remedy the defects outstanding and hence not entitled to receive further payment including the 5% retention fee. With the pretrial conference settling part of the dispute between the parties, the following were agreed as the outstanding issues for trial:
1. Whether or not the Defendant has breached the terms of the contract agreed between the parties on the 18th of December, 2012.
2. Whether or not Defendant owes Plaintiff the sum of £20,618.49 or its cedi equivalent representing the outstanding amount owed including the 5% retention fee payable under the contract having since paid £12, 772.00 to the Plaintiff since the inception of the trial.
3. Whether or not Plaintiff is entitled to its claim.
EVALUATION OF THE EVIDENCE AND APPLICATION OF THE LAW
The issues before the court has been narrowed with the agreement of the Defendant to pay an amount of £12,722.22 at the pretrial conference, amount which represented the difference brought about as a result of the payment of the 20% contractual sum in cedis instead of pounds sterling. What therefore is in contention is the 5% of the entire contractual sum which was reserved as retention fee to be paid after the defect liability period had elapsed. There was little dispute as to the exact amount of this 5% retention fee as seen from the cross examination of Plaintiff’s representative, Gershon Wornoo on the 22nd of November, 2017 in the following exchanges:
“Q: How much does the Defendant owe you as at now?
A: My Lord, £22,318 in that range
Q: I am putting it to you that the outstanding money as at now which is the dispute now is 5% retention fee which is still not paid by the Defendant and that amount is not £22,318 as you are saying.
A: My Lord, it is the 5% retention fee but it is £22,318.
Q: The 5% retention fee is £20,617.49
A: My Lord I stand corrected, that is the figure …”
Indeed the correct figure as he says he stands corrected is £20,617.49 and that is the amount Plaintiff claim as the outstanding to be paid him from the contract.
Plaintiff during trial testified through its Chief Executive Officer, Gershon Wornoo and Richard Ansah a senior technician with Plaintiff. Between them they tendered about twenty eight exhibits among which were notification of award as Ex ‘A’, the contract agreement as Ex ‘B’, performance bond as Ex ‘C’, a substantial completion certificate as Ex ‘L’, remedial work schedule as Ex ‘W’ series etc. The Defendant on the other hand testified through Kofi Owusu-Appiah, the manager in charge of Occupational Health, Safety, Security and Environmental and tendered exhibits 1 to 6 most of them being letters and email exchanges.
ALLEGATION OF BREACH OF CONTRACT
Plaintiff seeks damages for breach of contract in so far as matters stands for the failure for the payment of the 5% retention amount after the six month defect liability period agreed between them had elapsed. What constitutes a breach of contract has been defined by Professor Treitel on the Law of Contract as:
“a breach of contract is committed when a party without lawful excuse fails or refuses to perform what is due from him under the contract, or perform defectively or incapacitates himself from performing”.
In law where there has been a breach, other than an anticipatory breach where the other party has a number of option including affirmation of the contract, in general a claim of damages is available to the innocent party for the loss suffered. The loss incurred may be varied from Plaintiff’s loss of the benefit of the value he has conferred on the Defendant for which the latter has refused to pay, or Plaintiff’s claim based on a potential benefit or net profit Plaintiff would have made had the contract been performed or a claim to damages based on the expenditure incurred in preparing for a performance by a Defendant such as happens in performance show contracts of entertainment. I reckon that the claim of the Plaintiff here is based on the first scenario of the loss of the benefit of the value conferred on the Defendant which he claim Defendant has failed to pay.
As to whether or not the agreed outstanding amount of £20,617.49 which represent 5% of the contract sum was due or not will require an appreciation of the terms of the contract, its interpretation, joint inspection exercise carried out by the parties and the correspondence exchanged between them as to what was expected to be remedied to determine whether Plaintiff has discharged its obligations under the contract and entitled to this final payment. From Ex ‘B’ which is the contract entered into between the parties under special conditions of contract (SCC) clauses, clause 15 the warranty period provided was twelve months whiles the period provided for defects to be remedied was “50% time of the delivery schedule of the particular”.
In other words the period agreed for defects to be remedied after the completion of the works was six months. This can clearly be seen in Ex ‘L’, the substantial completion certificate that states the agreed six months defect liability and warranty period from 4th August, 2014 to 3rd January, 2015. This period was agreed as the period for which defects discovered had to be remedied after which Plaintiff was discharged from any further liabilities. It appears the misunderstanding has to do with the different opinions held by the parties as to whether the preconditions necessary for discharge of Plaintiff had been met. To Defendant there was a list of items of works for Plaintiff to remedy attached to the substantial completion certificate for which Plaintiff had failed to remedy whiles Plaintiff claim it had remedied all the necessary works. The attachment called the Punch list stated among the defects and corrective measures that needed to be taken to include:
1. covering of rain pipe from the roof to the upper deck of the structure,
2. the screed floor of the upper deck to be given a terracotta tile finish, the walk
3. the walk way (staircase) from the basement leading to the first floor to be paved with the appropriate furnishing.
4. Adequate and appropriate furnishing to be provided for the control and conference rooms etc
Are these requirements that Defendant asked the Plaintiff to effect within the period of six months from August 2014 to January, 2015 before the 5% of the contract sum was released within scope of the works that was supposed to have been undertaken by Plaintiff part of the terms of the contract? For Plaintiff claim that some of the demands were not within the remit of their works and indeed the Defendant acknowledged this fact in its letter of Ex ‘X’ notifying Plaintiff of the grant of access to Defendant’s site to undertake the remedial works. For in paragraph 3 of Ex ‘X’ Defendant states, among other things, as follows:
“Please note that any additional repairs identified would be treated separately”.
Plaintiff’s technicians were on defendant’s site for the purpose of carrying out the remedial works as Richard Ansah, Pw1 notes in his evidence in chief before the court that the works were carried out and those not carried out were not within the scope of their works and had to be the subject of a separate agreement. In line with the admission of Defendant in Ex ‘X’ that any additional works identified by Plaintiff’s technicians would be treated as separate, Plaintiff’s technicians produced Ex ‘Z’ as what they claim to be the cost of extra works identified and which was not within the scope of the original works they were supposed to undertake. These included digging of trenches, purchase of cables, cost of laying underground cables etc all totaling 17,740.00 as to whether the currency was Ghanaian cedis or British Pounds was not stated but as the currency agreed for payment in Ex ‘B’ is pounds, I am safe to assume that the currency is pounds sterling. I will find as a fact that the bill presented to Defendant as seen in Ex ‘Z’ of items that needed replacement were not within the scope of items agreed by both parties to be remedied and was additional repairs that had to be treated separately. This finding is also informed by Ex Ex ‘B’, the contract document specifically Appendix ‘1A’ which states items that Plaintiff had to purchase to fulfill the technical aspects of the work entrusted to it by the Defendant. It appears most of the items listed in the Punch to Ex ‘L’ cannot be found in Appendix 1A of Ex ‘B’ and could safely be said that the Punch felled outside the scope of the contract and Defendant ought to have paid for it failing which Plaintiff cannot be blamed for not purchasing the items in the Punch and installing them for Defendant.
For in the case of NTHC v ANTWI  SCGLR 117 at 125 Date-Bah JSC notes that an offer indicates by words or conduct by the offeror that he is prepared to be bound by the contract in the terms expressed in the offer if only the offeree communicates his acceptance to those terms. An offer must be definite and final leaving no room for further negotiations. What the parties agreed on in Ex ‘B’ was definite, final and binding and an attempt to introduce further scope of works as a precondition for the payment of the 5% retention fee amounted to a variation of the terms of the contract entered into between the parties. And being so was caught by the third paragraph of Ex ‘X’ that they would be treated differently. Again one could see that the Defendant’s call for the extra works came not within the six month period the parties gave themselves from August, 2014 to January, 2015 but came almost two years after the period both parties agreed for any remedial works to be carried out. And under that circumstances Plaintiff cannot be deemed to be liable for those works not carried out and Defendant not justified to be still holding on to the 5% retention amount. Besides, the evidence of Richard Ansah provide the bases for the provision of Ex ‘Z’ being the extra works that had to be undertaken for the installations to function effectively and which I have found not to be within the scope to the works, that upon inspection of the site they found that the underground cables connecting most of the cameras had been damaged by a contractor carrying out a different work, CCTV equipment and radio waves in the control room was not functioning due to lack of servicing and maintenance, a missing microwave system transmitting wireless network to the cameras missing etc. and I think it is some of these works that Defendant confronted Pw1 as works not yet done in the following exchanges:
Q: Mr. Ansah I am putting it to you that there are still outstanding remedial works that are supposed to be carried out by your company
A: I am not aware there are outstanding remedial works that need to be done which were supposed to be the roofing but as far as I am aware they are completed that one
Q: Mr. Ansah I am putting it to you that you have not finished the work and there are still outstanding works to be done
A: I have no idea about that
Q: The CCTV cameras that you are supposed to have installed never worked and that your attention was drawn to this fact on several occasions at meetings between the parties
A: My Lord, after were done with the installations, we spent almost three to four months there, my team and I until we handed over to BOST when they brought in their team. So as at the time we were leaving the system was working”
What Defendant claim has not been done is beyond the scope of works that had to be carried out within the defect liability period, I so find and hold and even within the defect liability period was not within the scope of works contemplated. I further find that with the works completed and those works complained about by Defendant not part of the works to be carried, Plaintiff has fulfilled his part of his contractual obligations and entitled to the payment of the 5% retention sum of £20, 619.19. Interest being sought by Plaintiff on the amount is also granted from the 11th of August, 2015 till date of final payment.
DAMAGES FOR BREACH OF CONTRACT
Having found a breach of contract on the part of Defendant what then follows is damages. The philosophy that animates damages in contract is to place the innocent party as far as money can do in the same position he would have been in had the breach not occurred. The test that has been applied over the years have flowed from the classic decision of Alderson B in HADLEY v BEXANDALE (1854) 9 EX 341 and can be seen in terms of remoteness of damages and mitigation of losses now seen as reasonable foreseeability. See VICTORIA LAUNDRY (WINDSOR) LTD v NEWMAN INDUSTRIES LTD  2KB 528 Asquith LJ; ROYAL DUTCH AIRLINES v FARMEX LTD [1989-90] 2 GLR 623 @ 625; TEMA Oil REFINERY v AFRICAN AUTOMOBILE LT.  2 SCGLR 907. Damages may be either general or special in nature. It is general when losses are deemed to have resulted from the action of the Defendant. Special damages are not presumed by law but must be particularized, pleaded and proved.
There are a number of damages that fall under general damages and they include, among others, nominal damages, substantial damages, aggravated damages, parasitic damages, exemplary damages and incidental/consequential damages. Substantial Damages are damages given when actual damage has been caused. They are also called ‘actual or compensatory damages’. And in that respect bears some semblance with aggravated or parasitic damages as it is also in the nature of actual or substantial damages. General damages in the form of nominal is usually awarded due to the fact that a breach of duty has been caused without prove of actual loss. It could be seen that the form of damages that Plaintiff claim here is in the nature of general damages. General damages is governed by the principle set down in cases such as DELMAS AGENCY GHANA LTD v FOOD DISTRIBUTORS INT. [2007 – 2008] SCGLR 748. See also the recent decision of the Supreme Court in ASKUS LTD v HARRY BOAKYE & OTHERS J4/14/15 dated 20th April, 2016, judgment of Appau JSC. And that is a small or nominal amount fixed for a breach of contract without regard to the amount of harm caused. The law presume general damages to be direct and consequential result of the Defendant’s action.
On the whole I find it just in the exercise of my discretion to award a sum of GH¢10.000.00 as general damages.
I will assess the cost to be paid by the Defendant to cover for the expenses incurred in prosecuting this action to be GH¢10.000.00.