NYAGSI ENGINEERING LTD vs GHANA HIGHWAY AUTHORITY
  • IN THE SUPERIOR COURT OF JUDICATURE
    IN THE HIGH COURT (COMMERCIAL DIVISION)
    ACCRA - A.D 2018
NYAGSI ENGINEERING LTD - (Plaintiff)
GHANA HIGHWAY AUTHORITY - (Defendant)

DATE:  15 TH MARCH 2018
SUIT NO:  OCC/34/15
JUDGES:  JENNIFER DODOO (MRS) JUSTICE OF THE HIGH COURT
LAWYERS:  L.N.S. AKUETTEH FOR PLAINTIFF
AYIKOI OTOO FOR DEFENDANT
JUDGMENT

 

1. Construction Contracts: Offer and Acceptance, Intention to be legally bound

2. Special Damages to be particularized and proven

3. Award of General Damages(factors to take into consideration)

4. Interest rates and how calculated

 

The Plaintiff’s claim against the Defendant is for general and punitive damages for breach of contract.

It was the Plaintiff’s case that in June 2007 it tendered for and sometime in 2008 won a competitive bidding contract to undertake the upgrading of the 54.2 kilometres Yendi-Gushiegu Road in the Northern Region of Ghana.

It averred that the Central Tender Review Board of the Ministry of Finance & Economic Planning gave concurrent approval for the award of the contract to it on 23rd December 2008. This was followed by a letter dated 5th January 2009 confirming the award of the contract at a price of GH¢35,994,052.54. It was the Plaintiff’s case that the Defendant had demanded the provision of a performance security and had indicated that with this condition fulfilled, the contract agreement would be signed. According to the Plaintiff, after arranging a performance bond from the Quality Insurance Company, it set about making arrangements at great cost to position itself to satisfactorily perform the contract.

 

However, it received a letter on 30th April 2009 suspending the commencement of the job. Plaintiff averred that out of a number of companies that were awarded contracts, it was the only one which lost out. Efforts to get a replacement contract proved abortive. Plaintiff said the Defendant’s conduct had brought it to its knees as it had suffered great losses. The Defendant in its defence denied that there had been a validly signed contract agreement between the parties. It was its stance that the Plaintiff took unnecessary risks in concluding agreements with foreign partners and denied liability for the Plaintiff’s losses.

The following issues were forwarded to this court for trial:

1. Whether or not there was a binding contract between Plaintiff and the Defendant?

2. Whether or not the Defendant breached the said contract?

3. Whether or not the Plaintiff suffered any damage in reliance on the said contract?

4. Whether or not the Plaintiff is entitled to its reliefs?

5. Any other issues arising from the pleadings.

 

The general rule in evidence is as stated in Ababio v. Akwasi (1994/95) 2 GBR 774 is that a party whose pleadings raised an issue essential to the success of its case assumes the burden of proving such issue. And as per Re: Ashalley Botwe Lands; Adjetey Agbosu & Ors v. Kotey & Ors (2003/2004) SCGLR 420, the burden of producing evidence in any given case was not fixed, but shifted from party to party at various stages of the trial, depending on the issue(s) asserted and/or denied.

The first issue is: Whether or not there was a binding contract between the Plaintiff and the Defendant?

From the evidence before this court, the Plaintiff put in a bid for the Upgrading of the Yendi-Gushiegu Road on 4th November 2008 (See Exhibit A). This was after the job was put out on tender. In Chitty on Contracts, Volume 2 at p. 535, the learned author stated:

The employer will typically send out an invitation to a list of pre-selected contractors or even to a single contractor, and the contractor will submit offers to carry out the work in the form of a tender. For larger construction projects, the tender procedure will often be complex, protracted and costly for the prospective contractors. The submission of a tender is an offer by the contractor to carry out work, so that a tenderer is always at risk of having this tender rejected. This is generally to be regarded as an occupational hazard of the contractor’s business. Any claim to recover the costs of tendering will fail if it is made clear that no contract shall be entered into unless a certain condition is satisfied and that condition is not satisfied, or if negotiations are conducted on the assumption that either party is free to withdraw from them and the defendant does withdraw before a contract is concluded.

 

Did the Defendant in this case withdraw before a contract was concluded? The evidence shows that the Plaintiff was successful in its tender. In Exhibit B, the Central Tender Review Board wrote to the Defendant on 23rd December 2008 giving concurrent approval to the recommended tenderer which happened to be the Plaintiff. Exhibit B further directed the Defendant as follows:

You will now proceed with the remaining processes and ensure that proper records are kept for any future Procurement Audit.

Following this, Exhibit C dated 5th January 2009 and emanating from the Defendant’s outfit was written to the Plaintiff. This will be set out in full for its full import.

THE MANAGING DIRECTOR

M/S NYAGSI ENGINEERS LTD

P. O. BOX 16161

AIRPORT-ACCRA

Sir,

LETTER OF ACCEPTANCE

UPGRADING OF YENDI-GUSHIEGU ROAD

KM 13-67.2 LOT 11

This is to notify you that, the Central Tender Review Board per letter No. CTRB/GHA.5/APP/08, has granted concurrent approval for the award of the named contract to you at a contract price of GH¢35,994,052.54.

The time for completion is 36 calendar months.

The value of the Performance Security shall be 10% of the contract sum if it is a Guarantee or

a. by letter of credit issued by a Bank or 30% of the contract sum if it is a Bond issued by an Insurance Company.

Following receipt of the Performance Security you will be invited to:

(i) Sign the Contract Agreement as provided in the Tender documents; and

(ii) To commence performance of the said contract in accordance with the Contract Documents.

 

From the chronology of facts, the Plaintiff went beyond the tender stage and was issued with a letter of acceptance. According to Cheshire & Fifoot’s, Law of Contract 11th edition at p. 27, an agreement is said to be not a mental state, but an act and as an act is a matter of inference from conduct. The parties are to be judged by not what is in their minds but what they have written, said or done. For as Chief Justice Brian proclaimed “the devil himself knows not the intent of a man.” What have the parties said and done in relation to the transactions between them? The Plaintiff put in a bid which was accepted by the Defendant. The Defendant wrote to the Plaintiff Exhibit C which is a letter of acceptance. From the tenor of Exhibit C, the Plaintiff was to provide Performance Security after which it was to be invited to sign the Contract Agreement as provided in the Tender documents; and then to commence performance of the said contract in accordance with the Contract Documents.

Section 30(1) of the Public Procurement Act, 2003 (Act 663) states:

In tender proceedings, acceptance of the tender and entry into force of the procurement contract shall be carried out in accordance with section 65 of this Act.

 

The relevant portions of Section 65 are as follows:

(1) A tender that has been ascertained to be the successful tender in accordance with this Act shall be accepted and notice of acceptance of the tender shall be given within 30 days of the acceptance of the tender to the supplier or contractor submitting the tender.

(2) Where the tender documents require the supplier or contractor whose tender has been accepted to sign a written procurement contract conforming to the tender, the procurement entity and the supplier or contractor shall sign the procurement contract within 30 days after the notice referred to in subsection (1) is dispatched to the supplier or contractor.

(3) Where a written procurement contract is required to be signed, the contract shall enter into force on the commencement date indicated on the contract.

(4) Between the time when the notice is dispatched to the supplier or contractor and the entry into force of the procurement contract, neither the procurement entity nor the supplier or contractor shall take any action that interferes with the entry into force of the procurement contract or with its performance.

(5) Except as provided in subsection (2), a procurement contract in accordance with the terms and conditions of the accepted tender enters into force when the notice is dispatched to the supplier or contractor that submitted the tender, if it is dispatched while the tender is in force.

(6) The notice is dispatched when it is properly addressed or otherwise directed and transmitted to the supplier or contractor or conveyed to an appropriate authority for transmission to the supplier or contractor in a manner authorised in section 26.

 

Therefore, in consonance with the law, the Defendant after accepting the Plaintiff’s tender gave notification on 5th January 2009 of its acceptance. The Plaintiff was given 28 days within which to submit the Performance Security stipulated in the tender documents. On 12th January 2009, the Plaintiff secured a Performance Bond in the sum of GH¢10,798,215.76. After submitting this bond, the Defendant was required within 30 days to have the contract signed. This it failed to do. Was there a valid contract between the parties? In NTHC v. Yaa Antwi (2009) SCGLR 117, Date-Bah JSC defined a valid offer and acceptance in the following words:

Basically, an offer is an indication by words or by conduct by an offeror that he or she is prepared to be bound by a contract in the terms expressed in the offer, if the offeree communicates to the offeror his or her acceptance of these terms. Accordingly, the offer has to be definite and final and must not leave significant terms open for negotiation. By significant, we here mean terms that are essential to the bargain contemplated. It is important to emphasize the proposition that the mere acceptance of an offer is sufficient to turn the offer into a contract, if there is consideration for it, together with an intention to create legal relations.

 

As usual recourse would be had to the evidence before the court to make a determination.

See also the case of Reardon Smith Line Ltd v. Hansen Tangen (1976) 1 WLR 989 where Lord Wilberforce stated:

“When one speaks of the intention of the parties to the contract one speaks objectively – the parties cannot themselves give direct evidence of what their intention was – and what must be ascertained is what is to be taken as the intention which reasonable people would have had if placed in the situation of the parties.”

 

The court finds that the Plaintiff in submitting its tender made an offer which the Defendant accepted and it conveyed its acceptance by writing Exhibit C. The parties intended to be legally bound when the Plaintiff was asked to submit a performance bond after which it would be invited to sign the contract and commence construction. Therefore despite the fact that no written contract had come into being due to no fault of the Plaintiff, did not negate from the fact that there was a valid contract existing between the parties. Both at common law and under the Public Procurement Act, there was indeed a contract between the parties.

After determination that there was a valid contract between the parties, the next issue would be whether or not the Defendant breached the said contract. As stated above, the Public Procurement Act gave a 30 day period after notification of acceptance for the contract to be signed. On 14th April 2009 the Plaintiff’s Managing Director wrote to the Chief Executive of the Defendant Company. The letter tendered in evidence as Exhibit G stated:

Dear Sir,

RE: LETTER OF ACCEPTANCE

UPGRADING OF YENDI-GUSHIEGU ROAD (KM13-67.2)

We refer to the letter of acceptance addressed to us dated 5th Jan. 2009 reference 4213/NEL/003 and signed by the Northern Regional Director of GHA on the above subject and wish to remind you that even though we have complied timely with the terms of paragraph 3 of your letter, we are yet to receive your invitation mentioned in paragraph five, to sign the agreement and commence performance of the contract.

We have remained in a high state of preparedness for over two months expecting your invitation which is yet to come.

We would appreciate your prompt action on the matters referred to above.

 

Exhibit H was written in response to Exhibit G. It was dated 30th April 2009 and stated as follows:

RE: UPGRADING OF YENDI-GUSHIEGU ROAD (KM 13-67) LOT II Your letter of 14th April 2009 on the above-mentioned subject refers.

The Ministry of Roads and Highways has directed that all newly awarded projects that have not started should be put on hold.

Consequently, since the above contract’s document has not been signed and possession of the site and commencement notice have not been issued, it is prudent that the project be suspended until further notice.

Your cooperation is solicited with this directive.

 

The Defendant also tendered in evidence, Exhibit 5 which is the same document as Exhibit H. In cross-examination of the Defendant’s representative on 31st May 2017 the following ensued:

Q: Mr. Issahak, you remember yesterday we talked about your Exhibit 5 dated 30th April 2009, that is the letter from Ghana Highway Authority suspending the Plaintiff’s contract among others?

A: Yes. My Lord.

Q: In that letter, did the Defendant give any reason why it was suspending the Plaintiff’s contract?

A: Yes My Lord.

Q: What was the reason given?

A: The reason was given in the Defendant’s letter to the Plaintiff suspending the work.

Q: You have the letter before you. Can you read the reasons given in that letter to the court?

A: Witness reads same to the court.

Q: So from what you read, was any reason given why the project was being suspended?

A: Yes, the GHA received a directive from the Ministry and I have stated it in my witness statement. From Exhibit 5 the reason was that there was a change of government and the new government came out with that directive in order to look at the possibility of the procurement process and the funding.

Q: What you have said, is it contained in Exhibit 5?

A: No, it is not contained in Exhibit 5.

Q: Did Exhibit 5 say the contract was being suspended because the Plaintiff has not been able to fulfill the requirements?

A: No My Lord, it did not state that.

Q: Did it say the suspension was because the Plaintiff would be unable to perform the contract?

A: No. My Lord.

Q: Did it attribute any fault on the part of Plaintiff why the contract was being suspended?

A: No. My Lord

Q: Did it say the contract was being suspended for lack of funds?

A: No. My Lord.

 

The contract for all intents and purposes had been suspended and the Plaintiff who had been awarded same was not able to fulfill its purpose of constructing the Yendi-Gushiegu Road for which it had presented a successful bid. The Defendant did not fulfill its obligation under the contract. It did not complete the process of signing the contract and handing over the site to Plaintiff. It was in breach of its obligations under the contract and under the Procurement Act.

 

The next issue for determination is whether or not the Plaintiff suffered damage in reliance on the said contract?

The Plaintiff in its witness statement at paragraphs 19-23 has stated as follows:

19. The unlawful conduct of the Defendant has brought the company to its knees as the Company has suffered and continues to suffer huge losses and the banks and other creditors are on its neck for this monies plus accrued interests thereon resulting in some banks taking judgments against it.

20. At the time it tendered for the contract all its ongoing projects were about to be completed and due to the magnitude of the contract which was to last for 3 years all its professional staff and technicians felt secured and were on board towards the execution of the contract but when the contract was halted all its professional staff abandoned the company. The Plaintiff had to lay some staff off because it could no longer afford to pay their social security and this resulted in law suits against the Plaintiff.

21. The Defendant’s breach of this contract has not only led to the collapse of the company but has reduced the Plaintiff from a Class A1B1 company under the classification of the Ministry of Roads and Highway Classification System to a company not being in good standing …

22. As a result of Defendant’s breach, Plaintiff’s loss can be estimated to GH¢36,014,924.19.

23. Defendants have failed to reimburse me for all the loss I have suffered as a result of their breach despite several attempts to settle…..

 

The Plaintiff said it made arrangements to secure equipment for the performance of the contract. Exhibit F is headed Contribution of Machinery to the Project and lists the following:

1.

Cost of Machinery

60%

2.

Operator

5%

3.

Consumables

10%

4.

Profit and Overheads

25%

 

Consequently the details are:

 

1.

Machinery

GH¢14,616,196.79

2.

Operator

GH¢1,218,016.40

3.

Consumables

GH¢2,436,032.80

4.

Profit and Overheads

GH¢6,090,081.99

This is as at year 2011

 

This document is signed by the Chief Executive Officer of Andrex Development Consultancy Ltd.

Did the Plaintiff pay for all the items found on Exhibit F? What type of machinery was acquired? And if these prices were as at 2011, was the equipment kept from 2009 when the contract was entered into and subsequently suspended until 2011? When did the Plaintiff acquire the machinery referred to in Exhibit F and where were the corresponding receipts attesting to this acquisition? Was the machinery purchased or was it for hire? No explanation apart from the figures given in Exhibit F was given to the court. In cross-examination of Plaintiff on 9th May 2017, the following information was elicited with regards to machinery:

Q: Is it your case that you bought the machines to execute the Yendi-Gushiegu project which was awarded to you and suspended within 4 months and within that period all the machines you bought had been idle and depreciated to the extent that they had become useless?

A: My Lord, construction companies don’t buy for specific projects. We look ahead and plan long term. These machines were bought in anticipation for projects to come.

Q: From this answer it is not necessarily that the machines were bought for the Yendi-Gushiegu road not so?

A: They were bought in anticipation of whatever project would come my way.

Q: Can you tell the court when you acquired those machines?

A: They are 2 sets of machines. One set was acquired with a loan from Bank of Africa and the other was acquired from NIB. The first set was before 2008 and the second set, the processes started in 2007. The 2007 was an arrangement with the Contractors Association with the Government of Ghana with the promise that when we acquire those equipment the government would give us projects which would enable us to pay for the equipment. And the Yendi-Gushiegu road project was the first government project I got after acquiring the machines and the project was frustrated.

 

From the evidence, the Plaintiff acquired some machinery with the loans from NIB and Bank of Africa. This machinery was not specifically for the contract that was eventually suspended but in anticipation of any project that would come its way and at a time when the tendering process had not occurred. The Plaintiff also stated that in view of the verbal assurances that the contract had only been suspended and would soon commence, it concluded an agreement with companies in Turkey for a one million dollar facility for use on the project after several trips and negotiations. Exhibit J has been attached to the witness statement as the Agreement between Nyagsi Engineers Ltd as First Party and UCEE, UAE & ANT ENERGY LTD, TURKEY as Second Party. It was dated 20th May 2012. In this agreement, the First Party had contracted with the Second Party to work together to their mutual benefit in undertaking the Yendi-Gushiegu Road Project. The Second Party had evinced its readiness to depositing $1 million into an escrow account located in Ghana. Would this expenditure have been foreseen by any of the parties to the original contract? From the evidence, the Plaintiff had entered into a competitive national bid and had not informed the Defendant that it was going to undertake the project with the assistance of a foreign partner. The contract was suspended in 2009. Exhibit J was entered into on 20th May 2012. Any expenses incurred in respect to travelling to invite joint venture partners would not be a matter in the contemplation of both parties at the time the Plaintiff put in its bid to carry out the road project. In view of the fact that the project had also been suspended, it was risky to enter into a joint venture with another partner when the suspension had not been lifted and commencement notice issued.

 

The Plaintiff said it also contracted internal loans in anticipation of the project. Exhibit P has been attached as a Term Loan Statement. This loan was contracted from the National Investment Bank on 21st June 2006.            Exhibit N is an Entry of Judgment in respect of a judgment awarded in favour of Amalgamated Bank against Plaintiff on 2nd April 2014. It was for recovery of the sum of GH¢315,996.92 together with interest on the said sum from

25th January 2008 to 25th March 2015. This means that at the time the Plaintiff put in its bid for the Yendi-Gushiegu Road on 4th November 2008, the loan had already been taken.

Furthermore, in Exhibit 9 under the topic Liquid Assets, the following was recorded:

The Tenderer provided line of credit from Amalgamated Bank Ltd, which satisfied the minimum threshold requirement for liquid assets. ….

 

This indicates that this line of credit was already in existence at the time the Plaintiff put in its bid for the project and at a time when the contract had not yet been awarded. It was the existence of this facility which caused its bid to be successful. There is no correlation between the Amalgamated Bank Loan and the suspended contract to show that the loan was taken to fulfill the contract expectations. In the case of Yamusah v. Mahama & Another, (1991) GLR 551, it was held that special damages were based on facts within the peculiar knowledge of the Plaintiff, so he must first plead them and then go on to prove them strictly in court and that these must not be too remote.

 

The Plaintiff’s representative did not lead evidence on the bank loans came about and how they related to the contract in issue. These incidental expenses made would constitute special damages which needed to be pleaded, particularized and proven. In the case of Andreas Bschor GMBH & Co v. B. W. C. Ltd (2008) 4 GMJ 203 the court quoting from Stroms Bruks Aktie Bolag v. Hutchinson (1905) AC 515 @ 525-526 per Lord Macnaghten had this to say:

“Special Damages are such as the law will not infer from the nature of the act. They do not follow in ordinary course. They are exceptional in their character and therefore, they must be claimed specially and proved strictly.”

 

I have studied the exhibits tendered at the trial, I have seen from Exhibit A that an amount of GH¢150,000.00 was set aside for obtaining the Performance Security Bond. I have also noted paragraphs 62 and 63 of the Defendant’s witness statement when it stated as follows:

62. In further denial, the Defendant states that having provided the Performance Bond as directed in the Letter of Acceptance dated 5th January 2009, the Plaintiff Company is entitled to be paid an amount of GH¢150,000.00 as per the bills of quantities together with interest at the prevailing Bank of Ghana lending rate for construction from January 2009 and computed at simple interest.

63. The Defendant say that a computation on the interest on the amount of GH¢150,000.00 shows that as at June 2016, the total interest is GH¢821,971.10 bringing its total indebtedness to the Plaintiff Company in respect of the Performance Bond to GH¢971,971.10.

 

Although the Plaintiff did not label this amount of GH¢150,000.00 as being special damages, it has prayed that this amount be refunded to it. While it stated the present investment value of GH¢150,000.00 as being GH¢1,076,516.26, the Defendant has computed its liability at the Bank of Ghana construction rate as being GH¢971,971.10. In Asante v. Bogyabi and Others (1966) GLR 232 @240 the court held:

Where admissions relevant to matters in issue between parties to a case are made by one side, supporting the other, as appears to be so in the instant case on appeal, then it seems to me right to say that that side in whose favour the admissions are made, is entitled to succeed and not the other, unless there is good reason apparent on the record for holding the contrary view.

 

The Court finds that the Defendant has corroborated the Plaintiff’s claim to GH¢150,000.00. Both of them have put their own interest rates on the admitted figure. The Court Award of Interest and Post Judgment Interest Rules (2005) CI 52 provides for the award of interest on judgment debts. It states at Rule 1 as follows:

1. If the court in a civil cause or matter decides to make an order for the payment of interest on a sum of money due to a party in the action, that interest shall be calculated

(a) at the bank rate prevailing at the time the order is made, and

(b) at simple interest

But where an enactment, instrument or agreement between the parties specifies a rate of interest which is to be calculated in a particular manner the court shall award that rate of interest calculated in that manner.

 

There was no agreement between the parties as to what interest rates would be applicable in the event of any breach of contract. There was also no evidence led by either party as to what the investment value was or what the Bank of Ghana construction rate was. As a result, the court only has recourse to CI 52 and this is the interest rate which is to be applied to the performance bond of GH¢150,000.00 from January 2009 up to and inclusive of the date of final payment. The Plaintiff has accused the Defendant of acts of discrimination. In paragraphs 14 and 15 of its witness statement the following statements were made:

14. Meanwhile out of 8 companies including the Plaintiff that were awarded various road contracts by the Defendant around the same time it was only the Plaintiff whose contract was singled out and suspended thereby discriminating and showing gross bias against the Plaintiff, a conduct which is unlawful and a violation of the Plaintiff’s constitutional rights as enshrined in the 1992 Constitution.

15. The Defendant acting in absolute bad faith, has meanwhile awarded the contract for the construction of the said road to another company which is working on same as at this date.

 

In cross examination of Plaintiff’s representative on 8th May 2017, the following ensued:

Q: So some contracts which had already been awarded but for which formal contracts had not been signed including handing over of sites and notice of commencement of work were suspended including the upgrading of the Yendi-Gushiegu were suspended to enable government re-award the Eastern corridor road contract and this is what happened in your case.

A: Yes. My Lord, but they subsequently allowed all other contractors in the same group to continue.

Q: You are a very experienced contractor and you know as a fact that it was only your project that fell within the new Eastern corridor project that was awarded. I am putting that to you.

A: My Lord no such information was given to me so I was not aware.

 

The Defendant in its witness statement at paragraphs 18-21 stated:

18. Around this same time, preparations had already began for the implementation of the Eastern Corridor Road Project which was a flagship project of the new government, and was to be executed as one total package but broken into 7 Lots starting from Tema Roundabout and ending at Kulungugu.

19. The 7 Lots of the Eastern Corridor Road Project are as follows:

Lot 1:   Tema Roundabout-Kpong-Atimpoku-Asikuma Junction (91.0 km)

Lot 2: Asikuma Junction-Hohoe-Jasikan-Poase Cement (147.2 km)

Lot 3: Poase Cement-Dodo Pepesu-Nkwanta 978.2 km)

Lot 4: Nkwanta-Oti Damanko (70.0 km)

Lot 5: Oti Damanko-Bimbilla-Yendi (86.0 km)

Lot 6: Yendi-Gushiegu-Nakpanduri 9123.2 km)

Lot 7: Nakpanduri-Bawku-Kulungugu (100.0 km)

20. It thus became obvious that it would not be technically feasible for the Plaintiff company to execute the works, as the entire stretch of the road that was awarded to it had been subsumed under Lot 6 of the Eastern Corridor Project.

21. This was subsequently communicated by the Defendant to the Plaintiff company at a meeting held on 2nd July 2013; that although it was under no legal obligation to do so, as a show of good faith, a proposal was made by the Defendant to offer the Plaintiff company another project of similar scope and magnitude as the Yendi-Gushiegu project.

 

In cross-examination of the Defendant’s representative on 30th May 2017, the following information was elicited:

Q: Can you tell the Court how many projects were put on hold in April 2009?

A: My Lord, I cannot off hand tell the number but I know there were about 5.

Q: In fact there were about 8.

A: My Lord I know about 5.

Q: Of the 5 projects that you know of, tell this Court whether they are still on suspension.

A: My Lord, they are not on suspension as at now.

 

The Defendant had contended that the Plaintiff’s contract had now been subsumed under the Eastern Corridor Road Project and therefore it was not technically feasible to lift the suspension in this case. The Defendant was not subjected to cross-examination on this evidence. What was the significance of this failure to cross-examine? See the case of Quagraine v. Adams (1981) GLR 599 where the court held that where a party made an averment and his opponent failed to cross-examine on it, the opponent would be deemed to have acknowledged that averment by the failure to cross-examine. See also the case of Takoradi Flour Mills v. Samir Faris (2005/2006) SCGLR 882 @ 890 where the court quoted with approval Tutu v. Gogo (1969) CC thus:

“in law where evidence is led by a party and that evidence is not challenged by his opponent in cross-examination, and the opponent did not tender evidence to the contrary, the facts deposed to in that evidence are deemed to have been admitted by the party against whom it is led, and must be accepted by the court.”

 

It was up to the Plaintiff to prove that it was the victim of discrimination. The Defendant has said that the Plaintiff’s project was the only one which was subsumed under the Eastern Corridor Road Project and handed over to a Brazilian Contractor. On 31st May and 5th June 2017 the following information was elicited from the Defendant:

Q: Did the Defendant play any role in the award of the Eastern Corridor Road Contract to the Brazilian Company?

A: Yes. My Lord.

Q: Tell the Court the role that the Defendant played?

A: The Defendant helped in the procurement process of the contract.

Q: Did the Defendant issue a tender or invite any or some companies to tender for the construction of the road?

A: My Lord, as an implementing agency, we take directives from the Ministry of Roads and Highways and they directed us to procure the Eastern Corridor Road through sole sourcing.

Q: What role did the Defendant play in the sole sourcing procurement process?

A: We met the selected contractor who indicated the time they were going to source for funds from the Brazilian government for the execution of Eastern Corridor. So they submitted their proposal, technical and financial which we negotiated with them and reported back to the Ministry. The Ministry after reviewing the proposal gave their ‘no objection” for the sole sourcing and I was a member of the team.

Q: On the last adjourned date I asked you when the Brazilian contract for Lot 6 was awarded and you said you would check from your records. Can you tell the court now when it was awarded?

A: My Lord, the Eastern Corridor road Lots 5 and 6 was awarded on 9th July, 2010.

 

So can the Court infer from the evidence that the Defendant was discriminatory towards the Plaintiff? In the case of Nyame v. Tarzan Transport (1973) 1 GLR 8 CA, the court held:

There is a distinction between pure conjecture and reasonable inference. A conjecture may be plausible but it is of no legal value for its essence is that it is a mere guess. An inference in the legal sense on the other hand, is a deduction from the evidence and if it is a reasonable deduction, it may have the validity of legal proof. The attribution is always a matter of inference.

See also Section 18(2) of the Evidence Act, 1975 NRCD 323 which states:

An inference is a deduction of fact of group of facts found or otherwise established in the action.

 

The court was not told which contracts were restored to the other contractors who had initially suffered the same fate as the Plaintiff i.e. whose contracts had also been suspended. The evidence only shows that the Plaintiff’s contract fell within the Eastern Corridor Roads which was allocated to a Brazilian company. This Brazilian company in turn was going to source for funding from the Brazilian Government to carry out the project. The court can only infer from the Defendant’s conduct that it wanted to take advantage of Brazilian funding for the road instead of funding same from its own coffers which it would have done had it restored the contract to upgrade the Yendi-Gushiegu road to the Plaintiff. By re-awarding the contract to a 3rd party, it behaved with scant disregard for the contract it had already entered into with the Plaintiff. But a finding of discrimination cannot be made.

 

However, the Defendant would be liable for any consequences arising from its act of suspending the Plaintiff’s contract and re-awarding same to a Brazilian Contractor. In the case of Nicol v. Customs Excise and Preventive Service (CEPS) (1992) 1 GLR 135 @ p. 137, the court quoting from Rookes v. Barnard (1964) AC 1129 @ 1226 per Lord Devlin had this to say:

The first category is oppressive, arbitrary or unconstitutional action by the servants of the government. I should not extend this category—I say this with particular reference to the facts of this case—to oppressive action by private corporations or individuals. Where one man is more powerful than another, it is inevitable that he will try to use his power to gain his ends; and if his power is much greater than the other’s he might, perhaps, be said to be using it oppressively. If he uses his power illegally, he must of course pay for his illegality in the ordinary way; but he is not to be punished simply because he is the more powerful. In the case of the government it is different, for the servants of the government are also the servants of the people and the use of their power must always be subordinate to their duty of service.

 

The Defendant though it may have acted “on orders from above” had breached the contract it had with the Plaintiff.

In the case of Praah v. Anane (1964) GLR 458 @ 465, the court held that the breach of a contract normally gives the innocent party a right to damages at common law. In the case of Yungdon Industries Ltd v. Roro Service 2005/2006) SCGLR 816 the court held that general damages was such as the law would presume to be the natural or probable consequence of the Defendant’s act. It would arise by inference of law and therefore be unnecessary to be proved by evidence and might be averred generally. On the question of damages for breach of contract, the classical case in this regard is Hadley v. Baxendale (1854) 9 Ex. 341. The facts of this case were that Hadley, a miller engaged Baxendale, a carrier to take a broken shaft to the manufactures to make him a new one. The Defendant delayed in delivering the shaft. The Plaintiff therefore sued the Defendant for loss of profit whilst the mill lay idle. The court dismissed the claim on the ground that there could have been a spare shaft. The fact that there was no spare shaft was neither in the contemplation nor in the actual knowledge of the Defendant nor would a reasonable man, under the circumstances, have known that there was no spare shaft. As the court stated:

Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as should be fairly and reasonably be considered as either arising naturally, i.e. according to the usual course of things, from such breach of the contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as a probable result of the breach of it.

 

See also Nartey-Tokoli v. Volta Aluminium Company Ltd (1989/90) 2 GLR 341 @ 369 where the court said:

The measure of damages in all actions for breach of contract is the same, namely the pecuniary loss sustained provided that such loss flows naturally from the breach in question and this will be the case whenever the loss is such as any reasonable person knowing all the circumstances existing at the time of the breach which are known or ought to be known by the Defendant would have contemplated as likely to result by the breach in question.

 

The parties both called expert witnesses in support of their cases. PW1 who described himself as a Certified Public Accountant which was the equivalent of a Chartered Accountant, tendered Exhibit U in evidence. This was the updated assessment of what PW1 said was due the Plaintiff for the breach of contract. He listed the various heads of damages as:

 

Loss of profit and associated interest

GH¢22,659.35

Cost of preparation to undertake contract

GH¢580,000.00

 

International travel, hotel and per diem

GH¢80,000.00

Visit to site with partners for pre-contract planning

 

GH¢100,000.00

Compensation for loss of business

 

GH¢4,500,000.00

Compensation for business classification and goodwill

GH¢2,000,000.00

Machinery and Equipment (Loss in value)

 

GH¢800,000.00

Accrued Indebtedness and financial loss

GH¢4,174,882.54

Legal and Consultation Fees

 

GH¢2,635,795.27

Total Cost of Denial of Contract Execution

 

 

GH¢37,779,732.16

 

The witness however said his main focus was with the figures and that he got all his information from the Plaintiff’s staff. DW1, who described himself as a specialist in construction law told the court that a road contract should usually contain the parties to the contract, the scope of works, the contract sum, the payment terms and remedies for breach of contract. He also testified that there was also a retention clause which was usually pegged at 10% of the face value of the amount due the contractor. He stated that 50% of this sum was released to the contractor on completion of the works and then the other 50% would be released after the defects liability period.

In his opinion, most of the claims made by the Plaintiff were not reimbursable as they were too remote. He however admitted that he had not read the tender documents that were the subject matter of the Plaintiff’s claim. He was however quick to add that he was giving evidence on standard contracts based on the rules set out under the Procurement Act which were themselves based on the International Union of Consulting Engineers (FIDIC) principles. The burden of proof was initially on the Plaintiff to lead evidence that would entitle it to judgment. See Section 17(2) of the Evidence Act, 1975 NRCD 323.

 

This burden continues to shift depending on the nature of evidence adduced by the parties and their witnesses. Thereafter, it was up to the Defendants to lead evidence in proof of their contention that they were not indebted to the Plaintiff as alleged. In Re Ashalley Botwe Lands: Adjetey Agbosu & Others v. Ebenezer Nikoi Kotey & Others (2003/2004) 1 SCGLR 420 @ 444 the court held as follows:

It is trite learning that by the statutory provisions of the Evidence Decree, 1975 (NRCD 323), the burden of producing evidence in any given case is not fixed but shifts from party to party at various stages of the trial depending on the issue(s) asserted or denied.

 

In Ackah v. Pergah Transport Ltd (2010) SCGLR 728 @ 736 the court held:

It is a basic principle of the 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. The method of producing evidence is varied and includes the testimonies of the party and material witnesses, admissible hearsay, documentary and things (often described as real evidence) without which the party might not succeed to establish the requisite degree of credibility concerning a fact in the mind of the court or tribunal of fact such as a jury. 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 the fact is more reasonable than its non-existence.

See also Section 12(1) of the Evidence Act which provides as follows:

Except as otherwise provided by law, the burden of persuasion requires proof by a preponderance of the probabilities.

Section 12(2):

Preponderance of the probabilities’ means that degree of certainty of belief in the mind of the tribunal of fact or the court by which it is convinced that the existence of a fact is more probable than its non-existence.

 

As stated earlier, the Plaintiff presented a list of items to which it affixed prices, but did not prove them strictly as required by law. I am therefore unable to agree with its Accountant’s figures of GH¢37,779,732.16 which it claims as damages as no evidence has been led to substantiate these claims. It was therefore up to the Plaintiff to sue for special damages if any existed and in addition to pleading and particularizing its claim, to prove same. In the case of Andreas Bschor GMBH & Co v. B. W. C. Ltd (2008) 4 GMJ 203 the court quoting from Stroms Bruks Aktie Bolag v. Hutchinson (1905) AC 515 @ 525-526 per Lord Macnaghten had this to say:

“Special Damages are such as the law will not infer from the nature of the act. They do not follow in ordinary course. They are exceptional in their character and therefore, they must be claimed specially and proved strictly.”

One is also reminded of Blay J.S.C. in Chahin & Sons v. Epope Printing Press [1963] 1

G.L.R. 163 at 168, S.C. when he said:

“They (i.e. the plaintiffs-respondents), merely presented a list of articles they alleged they had lost, fixed prices to them, and without attempting in any way to prove their values, expected the court to award them damages to the tune of the amounts claimed.

 

Similarly, I am unable to agree with DW1 that the Plaintiff is entitled to nothing. It has proven that there has been a breach of contract and for that it would be entitled to damages for the said breach. In assessment of damages, a court has to take into account whatever the Plaintiff had done to minimize his loss. See the case of Delmas Agency Ghana Ltd v. Food Distributors International Ltd (2007-2008) SCGLR 748. The Plaintiff took steps to engage the Defendant in an effort to get another contract. This did not materialize. The objective of awarding damages is to give a claimant compensation for the loss or injury he has suffered. The test if that the loss is recoverable if it was reasonably foreseeable as likely to result from the breach.

 

The Plaintiff has claimed loss of profits of about GH¢22 million. This consisted of a percentage of between 10-15% of the contract sum and specifically set at 12.5% together with interest. This figure of course would have been less wages, salaries, taxes and any repairs to the road during the defects liability period if the contract had been actually carried out. The court would therefore assess damages due the Plaintiff at GH¢1 million.

 

In sum, the Plaintiff succeeds partly in its claim against the Defendant in the following sums:

1. A refund of GH¢150,000.00 in relation to the Performance Security Bond at the prevailing commercial bank rate from January 2009 up to and inclusive of the date of final payment.

2. General damages of GH¢1 million.

State institutions may take guidance from Shakespeare’s Measure for Measure Act II, Scene 2 where it is stated:

“O! It is excellent to have a giant’s strength but it is tyrannous to use it like a giant.” Costs of GH¢50,000.00 is awarded against Defendant.

 

(SGD)

JENNIFER A. DODOO

JUSTICE OF THE HIGH COURT