MR. ISAAC KWADWO GYASI vs MR KWAKU NNURO & ORS
  • IN THE SUPERIOR COURT OF JUDICATURE
    IN THE HIGH COURT (COMMERCIAL DIVISION)
    KUMASI - A.D 2018
MR. ISAAC KWADWO GYASI - (Plaintiff)
MR. KWAKU NNURO & ORS - (Defendants)

DATE:  16 TH OCTOBER, 2018
SUIT NO:  P/RPC 90/2015
JUDGES:  DR. RICHMOND OSEI-HWERE JUSTICE OF THE HIGH COURT
LAWYERS:  KOFI EDUSEI FOR E. K. G. HAIZEL FOR THE PLAINTIFF
KWEKU PAINTSIL FOR THE DEFENDANT
JUDGMENT

 

By a Writ of Summons and Statement of Claim filed on April 24, 2015, the Plaintiff brought this action to this Honourable Court seeking reliefs contained in the Writ of Summon as follows:

a)    A recovery of an amount of SEVENTY-FOUR THOUSAND UNITED STATES DOLLARS ($74,000.00) or its equivalent in Ghana Cedi being refundable amount the Plaintiff paid to the Defendants.

b)    Interest at the current commercial bank rate on the sum claimed in relief (a) from December 7, 2014 till date of final payment.

c)    Recovery of the sum of NINETEEN THOUSAND, SIX HUNDRED AND FIFTEEN GHANA CEDIS(GH19,615) being the Plaintiff's total share of declared profits from February 2014 to November 2014.

d)    Interest on the declared profits in relief (c) from November 2014 till date of final payment.

 

The Plaintiff’s Case

The gravamen of the plaintiff’s case is that he entered into a refundable working capital agreement with the defendant for the importation of goods from China, and that the said agreement was reduced into writing per Exhibit A. In furtherance of the agreement, it is the plaintiff’s case that he advanced an amount of seventy-four thousand United States Dollars (US$74,000) to the Defendant. It is also the plaintiff’s case that per the agreement the parties were supposed to share the profit from the sale of the imported goods and that if a party intends to withdraw from the business a four-month notice must be served on the other party in lieu of the payment of the total working capital. According to the Plaintiff the Defendants were not transparent in the conduct of the business and on 7th August, 2012 he served the four months mandatory notice for a refund of his Seventy-four thousand United States Dollars in accordance with the agreement. The plaintiff stated that the first Defendant subsequently made a written undertaking to pay the said amount as well as his (plaintiff’s) share of the declared profit by instalment but the same was not fulfilled.

 

The Defendant’s Case

The 1st defendant denied liability to the plaintiff’s claim. He stated that the plaintiff initially contributed US$45,000.00 into the business and made another payment of US$29,000.00 bringing the total to US$74,000.00. He stated that in spite of the fluctuation in exchange rate which affected the import business he has advanced about GHC 120,000.00 to the plaintiff as his share of profit. It is also the 1st defendant’s case that at the time the plaintiff invested in the business the US Dollars to Ghana Cedis exchange rate hovered around US$ 1 to GHC 1.5, it would therefore be unfair for him to pay the plaintiff in Ghana cedis.

Issues for Determination

Settlement broke down at the pre-trial settlement stage and the following issues were set down for trial:

1. Whether the $74,000 is refundable.

2. Whether the Defendants are liable.

3. Whether the Plaintiff is entitled to the declared share of profit.

4. Whether the Plaintiff is entitled to interest on the sums attained.

 

In this judgment, I shall tackle all the issues together since they are intrinsically linked. I shall also advert my mind to the written submissions filed by both counsel in the analysis. As in all civil suits, the onus of proof first rests on the party whose positive assertions have been denied by his opponent. Depending on the admissions made, the party on whom the burden of proof lies is enjoined by the provisions of sections 10, 11(4), 12 and 14 of the Evidence Act, 1975 (NRCD 323) to lead cogent evidence such that on the totality of the evidence on record, the court will find that party's version of the rival accounts to be more probable than its non-existence. Indeed, this basic principle of proof in civil suits expounded in Zambrama v Segbedzie (1991) 2 GLR 221 has been subsequently applied in numerous cases including Takoradi Floor Mills v Samir Faris (2005/06) SCGLR 882; Continental Plastics Ltd v IMC Industries (2009) SCGLR 298 at pages 306 to 307; Abbey v Antwi(2010) SCGLR 17 at 19 (holding 2); and Ackah v. Pergah Transport Limited and Others [2010] SCGLR 728. In Ackah v. Pergah Transport Limited and Others(supra), Adinyira, JSC succinctly summed up the law, at page 736:

“It is a basic principle of law on evidence that a party who bears the burden of proof is to produce the required evidence of the facts in issue that has the quality of credibility short of which his claim may fail…It is trite law that matters that are capable of proof must be proved by producing sufficient evidence so that, on all the evidence, a reasonable mind could conclude that the existence of a fact is more reasonable than its non-existence. This is the requirement of the law on evidence under section 10 (1) and (2) and 11 (1) and (4) of the Evidence Act, 1975 (NRCD 323).”

 

I shall proceed to evaluate the evidence based on the various issues set down for trial.

Section 25 of the Evidence Act, 1975 (NRCD 323) provides:

“Except as otherwise provided by law, including a rule of equity, the facts recited in a written document are conclusively presumed to be true as between the parties to the instrument, or their successors in interest.”

In Akim Akroso Stool and Others v Akim Manso Stool and Others 1989-90 1GLR 100 at page 106, the Court of Appeal held that:

“what the word in a document mean can only be derived from the document itself. The intention of the parties must be gathered from the written instruments. The function of the court is to ascertain what the parties meant by the words which they have used. The court is to declare the meaning of what is within the instrument and not what was intended to have been written so as to give effect to the intention.”

Exhibit A is the primary document that guides the contractual relationship between the plaintiff and the 1st defendant. The preamble of the agreement states:

“AGREEMENT WAS made between Kwaku Nnuro of Nnuro Kente Limited, Kumasi, in the Ashanti Region of Ghana, (Hereinafter called the first party) which expression shall where the context so admits or requires which includes his Executors, Administrators and Successors according to customary law and assigns of the First Part and Isaac Kwadwo Gyasi of Post Office Box 1969, Kumasi, in the Ashanti Region of Ghana, (Hereinafter called the Second Party) which expression shall where the context so admits or require which includes his Executors, Administrators and Successor according to Customary Law and assigns of the Second Part.

 

WHEREAS the First Party, Kwaku Nnuro is the legitimate owner of the Nnuro Kente Limited, Kumasi, Ashanti and it is entirely free from all troubles and encumbrances whatsoever. AND WHEREAS the First Party, Kwaku Nnuro and the Second Party, Isaac Kwaku Gyasi have teamed up for the importation of Goods from China.

AND WHEREAS THE TWO parties have agreed to start with a working capital One Hundred and Seventy Thousand (174,000) Dollars.” It is clear from the document that the 2nd to 5th defendants are not parties to the agreement. The agreement was between the plaintiff and the 1st defendant. The 3rd defendant is the wife of the 1st defendant. The 2nd, 4th and 5th defendants are limited liability companies. From the evidence, it is not in doubt that the 1st defendant is a director of the defendant companies. It is also not in doubt that the 1st defendant used these companies in the implementation of the terms of the agreement. The terms of engagement of these companies are not clearly stated. It is, however, trite learning that a company is a legal entity distinct from its members. Hence it is capable of enjoying rights and of being subject to duties which are not the same as those enjoyed or borne by its members i.e. the shareholders, directors and officers of the company. This fundamental principle of corporate personality and its distinctiveness from its members was first espoused in the celebrated case of Salomon v Salomon [1897] AC 22.

 

The 1st defendant as a director and agent of the defendant companies cannot in his personal capacity enter into contracts for the same to bind the defendant companies unless he acted on behalf of the companies. On the face of exhibit A, the 1st defendant acted in his personal capacity and not as the agent of the defendant companies. In view of this, the 2nd, 4th and 5th defendant companies cannot assume liabilities associated with the contract. It also goes without saying that the 3rd defendant cannot be held liable since she was not a party to the contract.

I am not oblivious of the fact that per the involvement of the 2nd to 5th defendants in the execution of the contract terms in relation to the importation and sale of the goods, an impression could be created that they were parties to the contract. This impression would, however, be nullified by the terms of the contract which spelt out clearly the parties involved. The issue of estoppel by conduct cannot hold sway here since exhibit A made it clear that the 2nd to 5th defendants were not parties to the contract. The result is that there is no cause of action against the 2nd to 5th defendants. Consequently, the action against them fails.

Is the 1st defendant liable?

 

To prove the liability or otherwise of the 1st defendant, it is important to analyse the terms of the contract. It is provided as follows:

“NOW THIS DEED OF WORKING CONTRACT AGREEMENT WITNESSETH AS FOLLOWS:

1. That, the first party and the second party have agreed to contribute for working Contract Agreement for the importation of goods from China.

2. That the two parties have agreed to start with the working Capital of the One Hundred and Seventy Thousand Dollars, (170,000 Dollars) being the full payment of two Containers.

3. That, it is mutually agreed by both party that, each is to pay an amount of Eight-five Thousand Dollars, (85,000 Dollars) for the working Capital.

4. That, it is mutually agreed by both parties that, after the sales of the goods, the profit margin will be shared equally between the two parties, that is 50-50.

5. That, it is mutually agreed by both parties that, after the death of the first party, Kwaku Nnuro, his wife, Mrs. Theresa Nnuro shall continue to receive his shares whiles the second party’s wife, Mrs. Mary Gyasi should continue the business transaction and continue to receive her husband’s shares of the business when her husband passes away.

6. That, it is mutually agreed by both parties that, if the first party or Successor intends to pull out from the business Transaction, four months’ notice should be served with the second party so as to enable him or her for the total payment of the working Capital due him while if the successor of the second party intend to quit from the business, the same four months notice should be served for the working Capital to be paid to her in good faith.”

 

I have taken the liberty to highlight the terms of the agreement because when a court is called upon to enforce a contract, it is required to enforce what the parties have agreed to. The parties’ voices resonate in the document (Working Contract) they signed on 8th November, 2014 and the court must be guided by the words of this agreement, as these words effectuate the intentions of the parties. In Chatley v. Brazilian Submarine Telegraph Company[1981] 1 QB 71, Lindley LJ stated that:

“…the expression, construction [interpretation] as applied to a document and all events as used by English Lawyers includes two things: first the meaning of the words and secondly their legal effect or the effect which is to be given to them. The meaning of the words I take to be a question of fact in all cases, whether we are dealing with a poem or a legal document. The effect of the words is a question of law.”

 

The critical points worth emphasizing from the above exposition are that interpretation invariably is not concerned with the meaning simpliciter of a provision in a document, statute or constitution as suggested in a number of authorities but rather the meaning in a particular context or in relation to a particular situation. Emphasis is, therefore, placed on the scope and legal effect of the language used in a particular context. In William Brown v. Attorney General and 2 others, (Audit Service Case)[2010] SCGLR 183, Wood CJ expressed the clear direction of our Supreme Court when it comes to construction or interpretation of documents and statutes. She stated at page 202 that ‘‘the literalist or strict approach, that is a mechanical approach that does not look to the purpose of the contested provisions as a legitimate part of the exercise is clearly to be deprecated. … the purposive and literal approach is in proper context commendable; it is the purely mechanical or literal that pays no heed to the legislative purpose or intent that has no place in this area of the law.’’

 

My understanding of paragraph 6 of the agreement (read together with the other provisions) is that a party or his successor is at liberty to withdraw from the business and demand a refund of his working capital from the other party if he or she gives a four month notice in lieu of payment. The terms may appear stringent but they were entered into voluntarily by parties of full age and capacity. In view of this, the court has no option than to enforce it. In the case of Printing and Numerical Registering Co. vs. Sampson (1975) L R 19 EQ 462 at 507

Sir George Hessel said:

“If there is one thing more than another which public policy requires, it is that men of full age and understanding shall have the utmost liberty of contracting and that their contracts when entered into freely and voluntarily shall be held sacred and enforced by courts of justice.”

 

The Supreme Court gave a stamp of approval to the English authority above in the case of

Oppong vs. Anarfi (2011) SCGLR 556 where it was held as follows:

“The law was settled that a party of full age and understanding would normally be bound by his signature whether he read and understood it or not, particularly in the absence of the requisite evidence that the other party had misled him. Therefore, where parties had embodied the terms of their contract in a written document, extrinsic evidence or oral evidence would be inadmissible to add to, vary, subtract from or contradict the terms of the written instrument. Thus, mere negligence in not reading a document before signing could not amount to the defence of non-est factum.’’

 

It was in consonance with the terms of the agreement that the 1st defendant gave an undertaking in exhibit E to refund the plaintiff’s working capital of US$ 74,000.00to him. This was after the plaintiff had per exhibit D served the mandatory four-months’ notice to the 1st defendant for a refund of his contribution. In exhibit E, the 1st defendant also gave an undertaking to pay an outstanding total profit of GHC 19,000.00 to the plaintiff. For the sake of brevity, the content of exhibit E is reproduced below:

“I Stephen Kwaku Nnuro presents to Mr and Mrs Gyasi terms of payment of their capital of US$ 74,000 invested in the business both of us agree to do.

It is instructive to state that the business began with importation and sales of touch-light batteries and bulbs, which resulted in losses due to unprojected customs duties and price curtailments from our competitors on the market.

Management, however, decided not to pass on any bit of the lose to Mr. and Mrs Gyasi.

Mr. and Mrs Gyasi has (sic) served notice that they are no longer interested in the business.

Management cannot pay their monies at once, but intended to rather continue to manage the business prudently this year (2014) to enable it pay them all money invested in the business, as well as profits according to shipments from China which is the source of our business. This however, will be done instalments as appear below. This however, will be done in installment as appear below.

Notwithstanding this instalment schedule though, management has decided to pay Ghc 4,000 from the February 2014 profit of Ghc 9,400 in the first and second weeks of February 2014.

 

PARTICULARS

AMOUNTS ($)

PROFITS

CASH

 

 

(COMMISSION)

PAYMENTS ($)

 

 

¢GH

 

FEBURARY 2014

74,000

9,400

5000

MARCH 2014

69,000

8,807

10000

MAY 2014

59,000

7,599

10000

JULY 2014

49,000

6,311

15000

SEPTEMBER 2014

34,000

4,379

15000

NOVEMBER 2014

19,000

2,734

19000

 

EMMANUEL C. APPIAH (WITNESS) KWAKU NNURO STEPHEN

SIGN                                         SIGN

14-01-2014                            14-01-2014”

From exhibit E, the 1st defendant admitted his indebtedness to the plaintiff relating to the working capital and unpaid profit.

 

Where a matter is admitted proof is dispensed with, as held in the case of Samuel Okudzeto Ablakwa & Anor v Jake Obetsebi Lamptey & Anor [2013-2014] 1 SCGLR 16. The 1st defendant has tacitly admitted to the fact that per the arrangement the plaintiff is entitled to be paid the sum of US$74,000.00 and GH¢19,000.00 being the working capital and profit respectively. This admission is consistent with the evidence on record.

Indeed, by his own conduct the 1st defendant reaffirmed the plaintiff’s belief that he was not only entitled to a refund of the working capital but payment of profit as well. He is therefore estopped from claiming otherwise.

Section 26 of the Evidence Act, 1975 (NRCD 323) discusses estoppel by own statement or conduct as follows:

“Except as otherwise provided by law, including a rule of equity, when a party has by his own statement, act or omission, intentionally and deliberately caused or permitted another person to believe a thing to be true and to act upon such belief, the truth of that thing shall be conclusively presumed against that party or his successors in interest in any proceedings between that party or his successors in interest and such relying person or his successors in interest.”

 

The importance of this type of estoppel is that a person who by his words or conduct willfully or negligently causes another to believe in the existence of a certain state of things and induces him thereby to act on that belief or to alter his position is estopped from asserting against the other person that a different state of things existed at that time. In conclusion, I find the 1stdefendant liable to the claims. The plaintiff is entitled to a refund of the US$74,000.00invested in the business and payment of profit amounting to GH¢19,000.00. Accordingly, I enter judgment in favour of the plaintiff against the 1stdefendant in the amount of US$74,000.00 (or its Ghana Cedis equivalent)plus interest at the commercial bank rate from 7th December, 2014 till date of final payment.

 

I also enter judgment in favour of the plaintiff in the sum of GH¢19,000.00 plus interest at the commercial bank rate from November, 2014 till date of final payment.

Costs of GH¢10,000.00 is awarded against the 1stDefendant