IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
KUMASI - A.D 2018
MAXWELL OBENG - (Plaintiff)
KWADWO ODURO KWARTENG - (Defendant)
DATE: 10 TH APRIL, 2018
SUIT NO: OCC/38/14
JUDGES: ANGELINA MENSAH-HOMIAH (MRS.) JUSTICE OF THE HIGH COURT
LESLIE SENYO AMEDIOR FOR AKWASI ARHIN FOR PLAINTIFF
ISAAC OKYERE KUMAH FOR DEFENDANT
The parties to this suit entered into an agreement whereby the Defendant was to supply lumber to the Defendant who had decided to venture into the lumber business. It is the case of the Plaintiff that as of August, 2015, he had made various payments totaling GHC 59,865.00 to the Defendant, but the Defendant failed to supply the lumber.
When the Plaintiff demanded a refund of his money, the Defendant admitted owing the sum of GHC 59,865.00, pleaded for six months to pay the money and executed a promissory note to that effect. Consequently, the Plaintiff by his writ of summons and statement of claim issued from the registry of this court sought to recover the sum of GHC 59,865.00 and interest thereon from the Defendant. The Defendant caused an appearance to be entered on his behalf and proceeded to file a defence. However, the Defendant blatantly refused to comply with all the orders for the filing of witness statements even after he had been granted an extension of time.
Thus, in accordance with rule 7A 3(b) of the High Court (Civil Procedure) (Amendment) Rules 2014, C.I. 87, the statement of defence filed by the Defendant was struck out on 13/03/2018. A date was subsequently set for the Plaintiff to prove his claim.
The issues for determination are:
Whether or not the Defendant is indebted to the Plaintiff in the amount of GHC 59,865.00?
Whether or not the promissory note executed by the Defendant was an admission of his total indebtedness to the Plaintiff?
Whether or not the Plaintiff is entitled to his claim?
At the trial, the Plaintiff repeated the averments contained in his statement of claim on oath and tendered the promissory note executed by the Defendant as exhibit ‘A’. Further, the Plaintiff told the court that after the pre-trial conference, the Defendant made a part payment of GHC 20,000.00. In the course of cross-examination of the Plaintiff by counsel for the Defendant, it came out that the Defendant made another payment of GHC 15,000.00 to the Plaintiff on 09/04/2017 but the Plaintiff was silent on this payment in his evidence-in-chief. Again, counsel for the Defendant challenged the outstanding balance on the basis that the Plaintiff took delivery of “certain wood or timber” supplied by SKOD Timber Products Limited at Asikuma Sawmill. In response to this, the Plaintiff said that was a separate agreement unrelated to the present case. The Plaintiff insisted the Defendant’s indebtedness is the amount stated in the promissory note less the total payments of GHC 35,000.00.
In his closing submissions before this court, counsel for the Plaintiff referred the court to the Black’s Law Dictionary (2009) 9th ed. where a promissory note is defined as:
A written promise by one party (the maker) to pay money to another party (the payee) or to bearer.
Counsel again made reference to sections 83(1) and 88 of the Bills of Exchange Act, 1961 Act 55:
Section 83. Promissory note defined
A promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay on demand or at a fixed or determinable future time, a sum certain in money, to or to the order of, a specified person or to bearer.
Section 88. Liability of maker
The maker of a promissory note by making it
(a) engages that the maker will pay it according to its tenor, and
(b) is precluded from denying to a holder in due course the existence of the payee, and the capacity to endorse.
Counsel argued that throughout the transaction, the Plaintiff knew that he was dealing with the Defendant personally and not SKOD Timber Products Limited. He therefore urged the court to construe the promissory note against the Defendant who executed the same in his personal capacity.
From the definition of a “promissory note” indicated above, the promise has to be in writing; the sum involved has to be certain; and the time of payment must also be certain. In Williamson v. Rider (1963) 1QB 89, the court, adopting the reasoning in Dagger v. Shepherd (1946) 1 All ER 133, held that a note which is payable ‘on or before’ a given date is invalid as it is not payable at a fixed or determinable future time. The Promissory Note in issue, exhibit ‘A’, dated 29/02/2016,was written on the letter head of SKOD TIMBER PRODUCTS LTD. It reads:
This is to certify that, I Oduro Kwarteng, Managing Director of Skod Timbers Kumasi has received deposit amount totaling to GHC 59,865 from Mr. Maxwell Obeng of Kumasi for supply of local lumber of wood.
Due to break down of bush equipment we couldn’t supply.
I therefore promise that I have repairs all the machine so within the next six month I will supply him the order he made with me.
Exhibit ‘A’ as it stands, does not satisfy the requirements of a valid promissory note. However, it is evidence of admission of a debt, and a promise to supply goods simpliciter.
Now, can it be said that exhibit ‘A’ is an admission of a debt owed by SKOD Timber Products Limited as has been suggested in this case? From the line of cross-examination by counsel for the Defendant, he seems to suggest that the agreement was between the Plaintiff and SKOD Timbers, but not the Defendant in his personal capacity. In effect, counsel is putting the capacity in which the Defendant was sued in issue for the first time. In fact, in paragraph 2 of the Plaintiff’s statement of claim, he averred that:
The Defendant is a Managing Director of SCOD Timbers LTD who has his office at Kronum-Afrancho but lives at Nkenkensu in the Ashanti Region.
From the statement of claim, the Defendant entered into the transaction with the Plaintiff who described himself as the Managing Director of SKOD Timbers Ltd. In the body of exhibit A, the Defendant admitted receipt of the money in person, and also promised to make the supplies within a period of six months. Yet, he signed the document as a Managing Director. The law is that even though companies have the powers of a natural person, they act through human beings such as members in general meeting, board of directors and other officers or agents. Sections 139 and 140 of the Companies Act 1963, Act 179 provide for the liabilities of a company whilst the designated human beings are carrying out the business of the company. These sections state:
139. Acts of the company.
(1) An act of the members in general meeting, the board of directors, or a managing director while carrying on in the usual way the business of the company shall be treated as the act of the company itself; and accordingly the company shall be criminally and civilly liable for that act to the same extent as if it were a natural person.
(2) For the purposes of subsection (1),
(a) the company shall not incur civil liability to a person if that person had actual knowledge at the time of the transaction in question that the general meeting, Board of Directors, or Managing Director, did not have the power to act in the matter or had acted in an irregular manner or if, having regard to the position with, or relationship to, the company, that person ought to have known of the absence of power or of the irregularity;
(b) if in fact a business is being carried on by the company, the company shall not escape liability for facts undertaken in connection with that business merely because the business in question was not among the businesses authorised by the company’s Regulations.
140. Acts of officers or agents
(1) Except as provided in section 139, the acts of an officer or agent of a company are not the acts of the company, unless,
(a) the company, acting through its members in general meeting, board of directors, or Managing Director, has expressly or impliedly authorised that officer or agent to act in the matter; or
(b) the company, acting under paragraph (a) has represented the officer or agent as having its authority to act in the matter, in which event the company shall be civilly liable to a person who has entered into the transaction in reliance on that representation, unless that person had actual knowledge that the officer or agent did not have authority or unless, having regard to the position with, or relationship to, the company, that person ought to have known of the absence of authority.
(2) The authority of an officer or agent of the company may be conferred prior to action by that officer or agent or by subsequent ratification; and knowledge of action by that officer or agent and acquiescence in that action by the members for the time being entitled to attend general meetings of the company or by the directors for the time being or by the Managing Director for the time being, shall be equivalent to ratification by the members in general meeting, Board of Directors, or Managing Director.
(3) This section shall not derogate from the vicarious liability of a company for the acts of its employees while acting within the scope of their employment.
The Regulations of SKOD Timbers was not tendered in evidence, but as the name suggests, it is engaged in lumber business. That way, an agreement by a Managing Director to supply lumber to a customer can be classified as the “usual business” of the company. But in the present case, when the person who described himself as the Managing Director received monies from the Plaintiff, there is no evidence that any receipts were issued to the Plaintiff in the name of the company. It is highly probable that the said Managing Director actually received the money but failed to account for it to the company. The Plaintiff ought to have known of such irregularities if indeed the Defendant was entering into the transaction in his capacity as Managing Director of SKOD Timber Products Limited. The Plaintiff has led evidence to show that even though the Defendant described himself as Managing Director of SKOD Timbers, he entered into the transaction in his personal capacity.
From the circumstances of this case, the Defendant actually received the money from the Plaintiff but treated it as if he were a sole proprietor of the business. There is nothing to show that the monies so received was in any way accounted for in the books or system of SKOD Timber Products Limited. In such a situation, it will be unfair to robe in SKOD Timber Products Limited. In the transaction with the Plaintiff, the Defendant who has access to Letterheads of the Company by virtue of his position, used that document to cover up his misdeeds. In terms of section 139 (2) (a) of Act 179 quoted above, the Defendant is to be held personally responsible for any liability arising from his dealings with the Plaintiff. And indeed, he did promise to settle his obligations in the last paragraph of exhibit ‘A’. The court holds that that exhibit ‘A’, voluntarily given by the Defendant in his personal capacity, is evidence of his indebtedness as of that time and he is estopped from denying that he owes the Plaintiff personally. The court also observes that subsequent to exhibit ‘A’, the Defendant has made a total payment of GHC 35,000.00. Therefore, the outstanding balance due and payable to the Plaintiff is GHC 24, 865.00.
If the Defendant had in fact made any supplies to the Plaintiff, it was his duty to have given evidence on oath to that effect, especially so, where the Plaintiff has denied the same. “Suggesting” or “putting” a fact across to a witness during cross-examination does not amount to a sufficient proof of that fact in law, if that fact is capable of positive proof.
In Hilodjie v. George (2005/2006) SCGLR 974 at 995 Woode JSC ( as she then was) noted that:
In any action, cause or matter, a party who disputes an issue does not simply rest the case on formal denials either made in examination in chief or "put" or "suggested" to an opponent under cross-examination. If the opponent does not admit those suggestions, then he or she is deemed to have succeeded in establishing a prima facie case on the disputed fact, and the evidentiary burden then shifts onto that party to prove contrary facts, if he or she is desirous of avoiding a ruling against him or her on that issue."
In the instant case, the Defendant has failed to adduce any credible or cogent evidence that he indeed made any supplies to the Plaintiff in partial fulfilment of the transaction they entered into. The Plaintiff has been denied the use of this money for the relevant period, and as the Supreme Court held in Akoto v Gyamfi-Addo (2005-2006) SCGLR 1018, the Plaintiff is entitled to be paid interest on the amount owed him. To quote Lord Herschell in Chatham and Dover Railway Co. v. South Eastern Railway Co. (1893) AC 429:
When money is owing from one party to another and that other is driven to have recourse to legal proceedings in order to recover the amount due to him, the party who is wrongfully withholding the money from the other ought to pay interest.
Indeed, the above statement is a true reflection of the situation the Plaintiff finds himself in, as such, the Defendant must pay interest on the money unreasonably withheld from the Plaintiff. Accordingly, judgment is entered in favour of the Plaintiff against the Defendant in the sum of GHC 24, 865.00. Guided by the courts (Award of Interest and Post Judgment Interest) Rules 2005, C.I. 52, the Defendant is to pay interest on the sum of GHC 24,865.00 at the prevailing Bank rate and at simple interest from September, 2015 to the date of delivery of judgment; and post judgment interest at the same rate till date of final payment. For the avoidance of doubt, the bank of Ghana 91-days Treasury Bill Rate is to be used as the prevailing bank rate.
There is no order as to cost as counsel for the Plaintiff has waived cost.