IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
KUMASI - A.D 2018
SOLKROC LIMITED - (Plaintiff)
ANGLOGOLD ASHANTI (GHANA) LIMITED - (Defendant)
DATE: 20 TH JUNE, 2018
SUIT NO: P/RPC/100/15
JUDGES: ANGELINA MENSAH-HOMIAH (MRS.) JUSTICE OF THE HIGH COURT
J.B. DANQUAH FOR KWAME ADOM-APPIAH FOR PLAINTIFF
KWESI FYNN FOR DEFENDANT
This suit arose from the termination of a haulage contract which the Defendant Company awarded to the Plaintiff Company sometime in March, 2013. The Plaintiff initiated the action on 26/06/2015 but amended the writ of summons and statement of claim on 10/12/2015. On 05/12/2017, the Plaintiff filed a “Further Amended Writ of Summons and Statement of Claim”. The Defendant however maintained its statement of defence filed on 16/12/2015.
These are the reliefs sought by the Plaintiff:
a) Declaration that the unilateral abrogation of a valid contract (No C4033) dated 11th April, 2013 by the Defendant is an unfair breach of the contract between the Defendant and the Plaintiff as the plaintiff relied on same to change its position to its detriment;
b) Recovery of an amount of GHC 1,961,331 being the value of the 17 months unexpired term of the contract which was wrongfully abrogated by the Defendant;
c) Interest on the sum as mentioned in relief (b) supra from November 2014 till date of final payment;
d) Recovery of an amount of GHC 156,906.48 as expected profit (being 8%) of the total value of the 17 months unexpired term of the contract which was wrongfully abrogated by the Defendant.
e) Interest on the said sum as mentioned in relief (d) supra from November, 2014 till date of final payment;
f) Recovery of an amount of GHC 981,980 as special damages for the breach of contract;
g) Interest on the said sum as mentioned in relief (f) supra from November 2014 till date of final payment;
h) General damages for breach of contract.
THE PLAINTIFF’S CASE.
Whereas the Plaintiff has described itself as a haulage and plant hire company in the mining industry, the Defendant has been described as a Registered Mining Company; both companies are in Ghana. The crux of the Plaintiff’s case is that per a contract which was entered between the parties herein identified as C4033, the Plaintiff was required to haul three million, two hundred and forty thousand (3,240,000) tonnes of ore from various shafts of the Defendant company in the Obuasi Mines namely: KMS; KRS and SANSU Operations to a point identified as STP ROM Pad within the mines, for a period of three years; which translated to 1,746,000 tonnes of ore annually. Per the contract, the Plaintiff was required to provide 14 twenty- four cubic meter highway dump trucks for the efficient performance of the contract. The Plaintiff averred that relying on this requirement, it procured four additional brand new Howo (6x4) 70 tone mine dump trucks from JA Plant Pool at the total cost of GHC 1,060,928.00 of which its creditor, Standard Chartered Bank, made a down payment of 70% whilst the Plaintiff Company was responsible for 30%, payable by instalments, scheduled to coincide with the monthly contract payments to be made by the Defendant, as and when they fell due. However, when the contract had 17 more months to run, and about 1,017,814 tonnes of ore to be hauled and an expected revenue of GHC 1,961,331, the Defendant terminated the contract. After a series of protests against the notice of termination of the contract, the Plaintiff contended that the Defendant promised to offer another job to the Plaintiff to enable it pay off its debts, but refused to do so. At the time of termination of the contract, the Plaintiff alleged that it had contracted 12 drivers to operate the four new special purpose trucks for the duration of the contract, and they continued to draw salaries whilst the Plaintiff searched for other contracts. The Plaintiff also asserted that it has been heavily damnified financially by the defendant’s conduct and therefore claimed special damages of GHS 981,980.00, as particularized in paragraph 24 of the “Further Amended Statement of Claim”.
THE DEFENDANT’S CASE.
The Defendant did not deny that it entered into a haulage contract with the Plaintiff for a period of three years. Its case is that the Plaintiff was to haul quantities of ore and waste material actually produced by the Defendant, estimates of which were expressed in the contract, and the contract did not guarantee any minimum ore production. The Defendant also alleged that the parties never discussed the acquisition of dump trucks during the negotiation and signing of the contract, and the Defendant had no knowledge of any borrowing by the Plaintiff during the term of the contract because the Defendant warranted that it fully owned the dump trucks, and its ownership was free from all liens and encumbrances. Further, the Defendant contended that the contract provided modes of termination by the parties, including giving one month’s notice to the other party. Along the line, the Defendant contended that due to major changes in its operations and corporate strategy, it suspended/ceased several aspects of its mining operations including ore production at the shafts in issue, the Plaintiff was given notice, informed of the program for termination and there were discussions on all related issues. On 16/09/2014, the defendant averred that it exercised its contractual right and wrote to the plaintiff to terminate the contract by giving the agreed one - month notice, but the parties mutually agreed to extend the termination date after a series of discussions. On 09/10/14, the Plaintiff wrote to accept the termination and on 25/11/2015, the Defendant replied to the Plaintiff’s letter to confirm the extension of the termination date to 25/11/2015. Subsequent to the 10/10/2014 letter, the Defendant averred that the Plaintiff wrote to inform Defendant that it had taken loans to purchase dump trucks, and part of the loan was still outstanding, and also, the quantities of ores hauled were less than the estimates indicated. The Defendant’s position on this allegation is that it does not owe the Plaintiff any obligation under the contract to repay the Defendant’s loans, and reiterated its earlier advice to the Plaintiff to find alternative haulage contracts, or bid for other available contracts. It is the Defendant’s contention that the contract was duly terminated, and all obligations towards the Plaintiff have been duly satisfied.
ISSUES FOR TRIAL.
The issues which were adopted for trial and which are to be determined are:
Whether or not the contract between the parties was validly terminated by the Defendant?
Whether or not the plaintiff is entitled to its reliefs?
BURDEN OF PROOF.
This is a purely civil matter, hence the principles of proof in civil suits will apply. The Evidence Act, 1975 NRCD 323, spells out the nature and extent of the burden of proof in civil suits. This burden of proof consists of the burden of persuasion, and the evidential burden.
On the one hand, the burden of persuasion requires a party to establish a requisite degree of belief concerning a fact in the mind of the tribunal of fact or the court, and in civil suits, it requires a party to establish the existence or non-existence of a fact by a preponderance of the probabilities (section 10 of NRCD 323).
On the other hand, the evidential burden requires a party to introduce evidence to avoid a ruling against him on that issue.
In Sumaila Bielbiel v Adamu Dramani & AG (2012) SCGLR 370, the Supreme Court observed that “ordinarily, the burden of persuasion lies on the same party as bears the burden of producing evidence". Per the provisions of section 14 of NRCD 323, a party has “the burden of persuasion as to each fact the existence or non-existence of which is essential to the claim or defence he is asserting”, unless it is shifted.
In determining the balance of probabilities, the court is enjoined to consider and weigh all the evidence on record before arriving at its conclusion. Thus, in Takoradi Flour Mills v Samir Faris, (2005-2006) SCGLR 882, the Supreme Court held (headnote 5) that,
It is sufficient to state that this being a civil suit, the rules of evidence require that the Plaintiff produces sufficient evidence to make out his claim on a preponderance of probabilities as defined in section 12(2) of the Evidence Decree, 1975 (NRCD 323). In assessing the balance of probabilities, all the evidence, be it that of the Plaintiff or the defendant, must be considered and the party in whose favour the balance tilts is the person whose case is more probable of the rival versions and is deserving of a favourable verdict…
WHETHER OR NOT THE CONTRACT BETWEEN THE PARTIES WAS VALIDLY TERMINATED BY THE DEFENDANT.
With regards to the above issue, the burden of persuasion as well as the evidential burden rest on the Plaintiff and it is required to discharge the same. Put differently, the Plaintiff must establish its assertions that the Defendant’s unilateral abrogation of Contract C4033 amounts to an unfair breach of the contract between the parties, is more probable, than not (Sections 12 and 12(1) of the Evidence Act 1975, NRCD 323). In discharging the onus of proof placed on it, the Plaintiff Company gave evidence through its Managing Director, Mr. Solomon Mensah, who represented the Company in March, 2013 to enter into the contract identified as C4033 for the haulage of Ore and Waste Materials from the Defendant’s Obuasi Mine. The oral evidence adduced by the Plaintiff’s representative as contained in his witness statement filed on 13/12/2017, was basically a repetition of its statement of claim as summarized above. In addition to that, he tendered a copy of the contract document as exhibit ‘A’; documents emanating from JA Plant Pool and Standard Chartered bank as the exhibits B series; correspondences from AngloGold Ashanti pertaining to the termination of the contract as exhibit C series; a ledger account from JA Plant Pool, exhibit D; photocopy of trucks , exhibits E & E1; Solkroc Limited Junior Staff payment advice and a document titled “claim for losses incurred as a result of contract termination”, exhibit F series; various correspondences between AngloGold Ashanti and Solkroc Limited plus a demand notice from JA Plant Pool Limited, exhibit G series.
In effect, all what the Plaintiff said was that the termination of the contract in issue was done contrary to the terms of the contract identified as ‘C4033’, as a result of which the Plaintiff company has suffered a huge financial loss, especially, in relation to its contracts with Standard Chartered bank and the drivers employed to operate the newly acquired dump trucks which cannot be used for any other purpose. The Defendant’s representative tendered and relied on the contract document, exhibit ‘1’ and also gave oral evidence. According to him, the three-year contract which commenced on 11/04/2013, obliged the Plaintiff to provide 14(nr) 24m3 highway dump trucks to convey Ore and waste material produced by the Defendant from various shafts within the Defendant’s mine; the contract provided no minimum guaranteed production of Ore and waste material to be conveyed by the Plaintiff over the course of the contract. With regards to the dump trucks, the Defendant’s representative testified that the Plaintiff warranted that it owned the dump trucks and that the trucks were free from all liens and encumbrances. The means or mode of Plaintiff’s acquisition of the trucks or any issues related to the acquisition were extraneous and did not form part of the contract. Continuing, the Plaintiff’s representative said a table of estimates or annual ore and waste material production was annexed to the contract, and could vary based on actuals. According to him,the Defendant paid all invoices issued by the Plaintiff for actual quantities of ore and waste material conveyed under the contract, and also terminated the contract by giving the requisite notice.
Explaining the rationale for the termination, the Defendant’s representative told the court that in the year 2014, the Defendant reorganized its general mining operations and this affected many aspects of its operations, underground mining was scaled down, and this affected ore and waste material production. Discussions were held with all affected persons, including the Plaintiff, as this led to an extension of the termination date from 16/10/2014 to 25/11/2014. Copies of the relevant correspondences were tendered as exhibits ‘2’, ‘3’ and ‘4’. Further, the Defendant’s representative said there were discussions to consider alternative contracts for the Plaintiff but none was concluded. Subsequent to that, the Plaintiff made claims for liabilities on unpaid loans on acquisition of the dump trucks and other expenses, but the Defendant’s stance is that it is not liable for the claims made by the Plaintiff either under the contract or in this suit. The Defendant urged the court to dismiss the Plaintiff’s suit as unmeritorious. There is the need to comment on the Plaintiff’s exhibit ‘A’ and the Defendant’s exhibit ‘1’. Essentially, the two documents are the same. It may appear that the Defendant’s exhibit ‘A’ has some extra pages, but the discrepancies were explained away by the Defendant’s representative during cross-examination. The court also notes that pages 23 and 24 of the Defendant’s exhibit ‘1’, bear the signature and stamp of the Managing Director of the Plaintiff Company, it also has some values written in ink. These pages cannot be found in the Plaintiff’s exhibit ‘A’.
However, the said pages 23 and 24 are the same as Annexure A, which appears on page 19 of both exhibit ‘A’ and ‘1’, wherein the same values have been typed out from the initial one values in ink. The site inspection certificate, Annexure “C”, which appears as page 26 of exhibit ‘1’, also bears the signature and stamp of the Plaintiff’s representative, so the Plaintiff cannot feign ignorance of the said document which relates to the contract. Again, the said Annexure “C” which has the values of the fixed operating costs written in ink, contains the same information as the Annexure “C” of Plaintiff’s exhibit ‘1’, with the same values typed out. Therefore, the attempt by the Plaintiff to impress upon the court that exhibit ‘1’ is materially different from exhibit ‘A’, is mischievous. From the evidence before this court, both parties have always been aware of the “Termination” clauses in contract C4033. Clause 25.0 of both exhibits ‘A’ and ‘1’ make provision for ‘Termination’, specifically, clause 25.3 states:
25.3 Termination By Giving A Period Of Notice
The Employer shall have the power at its discretion to terminate the contract, either altogether or
in part, by giving a minimum period of notice in writing to the Contractor.
Such minimum period of notice shall be as stated in the contract or where no such period is stated
then a minimum period of thirty (30) days shall apply.
During such period of notice the Contractor shall continue to perform in terms of the Contract
but shall not incur any unauthorized cost.
In the event of termination of the contract in terms of this clause and on completion of the
aforesaid notice period the employer shall pay to the Contractor any sum of money that may be
due and payable for expenditure and liabilities properly incurred by the Contractor and the
Contractor shall not be entitled to any further payment of whatsoever nature.
25.5 Termination in writing
Termination in terms of this clause shall be in writing and shall be signed by the Senior Vice President-Obuasi Operations or his duly appointed representative.
25.6 Cost Incurred subsequent to termination Date
Notwithstanding anything stated or implied to the contrary, it shall be an express condition of the Contract, that where notice of termination has been properly served in writing, the employer will not be liable for any cost of whatsoever nature incurred by the Contractor subsequent to the Termination Date.
Relying on the above clauses in the contract, counsel for the Plaintiff argued in his closing addresses that, the contract provided for a fixed duration of three years as well as the quantity of ore to be hauled. The Plaintiff relied on these to procure four (4) new 24 m3 highway dump trucks from JA Plant Pool to augment its existing fleet, with a loan from Standard Chartered Bank as seen in the exhibit B series. Counsel argued that at all times material, the facts of the loan for the acquisition of the four (4) trucks to augment its fleet to meet the requirement in clause 2.0 of the contract was known to the defendant, as per exhibit ‘H’, wherein the Defendant undertook to pay for the Plaintiff’s services in the joint names of the Plaintiff Company and Standard Chartered Bank. For the Plaintiff, counsel again submitted that Standard Chartered bank in its loan agreement with the Plaintiff (exhibit B6) had recorded at page 2 thereof the source of money for the repayment of the loan as “Discounting bills presented for job executed for AngloGold Ashanti”. Counsel referred the court to clause 3.5 of the Borrower’s Covenants with the Bank that is the Plaintiff’s covenants with Standard Chartered Bank, which states:
All invoices to be discounted should be conformed first with the employer who shall also commit through a letter of domiciliation to assign all payments to the customer’s SCB account.
On the basis of the foregoing, counsel for the Plaintiff argued that it is reasonable to conclude that the Defendant possessed knowledge that the Plaintiff obtained a loan for the purchase of the four trucks, and was repaying with proceeds from the contract, and had not finished paying for the trucks at the time the contract was terminated on the basis of clause 25.3. Having led the Plaintiff to believe that the contract shall last three years, counsel argued that it was not open to the Defendant to terminate it after nineteen months (19). Counsel for the Plaintiff also relied on the principle of estoppel by one’s own statement or conduct which has been codified in section 26 of the Evidence Act, 1975 NRCD 323 thus:
26. Estoppel by own statement or conduct
Except as otherwise provided by law, including a rule of equity, when a party has, by that party’s own statement, act or omission, intentionally and deliberately caused or permitted another person to believe a thing to be true and to act upon that belief, the truth of the thing shall be conclusively presumed against that party or the successors in interest of that party in proceedings between.
(a) that party or the successors in interest of that party, and
(b) the relying person or successors in interest of that person.
Counsel supported this by the case of Moorgate Mercantile Co. Ltd v. Twitchings (1975) QB 225, 241-
243 where Denning M.R. had this to say about persons who enter into contracts:
When a man by his word or contract had led another to believe in a particular state of affairs he will not be allowed to go back on it when it will be unjust and inequitable to do so.”
Continuing, counsel submitted that the reason given by the defendant for the termination is not a condition/provision under the agreement, that the cessation of the production of ore and waste material was a deliberate act by the Defendant, and that the intended reorganization ought to have been in the contemplation of the Defendant at the time contract C4033 was executed. Counsel argued that the Defendant cannot terminate the contract without any reasonable cause, when the Plaintiff has not breached any warranty or condition in the contract; he also submitted that the sanctity of contracts ought to be protected by the Courts, and referred the court to an article by Date-Bah S.K. (1969) Vol. VI No.1 University of Ghana Law Journal (UGLJ) 60-63 titled TSEDE vs. NUBUASA 1: A WELCOME INROAD INTO THE DOCTRINE OF CONSIDERATION thus:
The justification for a wider category of enforceable promise is not merely a moral one, namely that a man’s word should be his bound. There is also an economic justification for not permitting people to resile from serious promise deliberately given. As dean Roscoe Pound has said, “wealth in commercial age, is made up largely of promise”. In an economic system where credit is of vital significance, it is important that the law should give a wider protection as possible to serious promise, especially those in business setting, the law must lend its weight to the enforcement of commercial morality and business probity in order to sustain the confidence of the business community in security of commercial transactions into which its members enter.”
Counsel for the Plaintiff is to be commended for his great industry. His arguments make interesting reading. That notwithstanding, counsel is expected to know, and he has in fact demonstrated to this court, that parties are bound by contracts which they enter into. With the greatest respect to counsel, his arguments about representations made by the defendant which led the plaintiff to commit itself to the agreement will not hold in the circumstances of this case, neither is the principle of estoppel by one’s statement or conduct applicable here. Likewise, counsel’s reference to the opinion of Date-Bah S.K. in his article referred, to supra, has no place at all given the facts, the evidence and circumstances of the present case. Morality cannot override the law or the rights of parties under a contract.
This is a case where the Plaintiff had to meet certain minimum requirements before the contract could be awarded to him. It is reasonable to infer from the Plaintiff’s conduct and dealings with Standard Chartered Bank (SCB), that he approached them for the needed credit to be able to go in for the contract. In other words, the Plaintiff’s pre-contractual engagements with third parties, like SCB and JA Plant Pool, were not at the instance of the Defendant, but rather, to aid the Plaintiff in meeting the requirements of the contract. The Plaintiff company was not under any compulsion to accept the contract if it lacked the requisite equipment. Per the evidence before this court, the loan contract between SCB and the Plaintiff herein was first in time. Whereas the contract described as C4033 was executed by the parties on 11/04/2013, the loan which the Plaintiff contracted was executed on 16/11/2012 (see exhibit B6). The obligations of the parties to the loan agreement were carefully spelt out thereunder. The primary obligation of SCB was to advance monies for the purposes for which the borrower (now the Plaintiff herein), required the facilities, which it did. The primary obligation of the Borrower was to repay the loan, together with all interests.
Indeed, the borrower covenanted under clause 3.2 of the loan agreement that it shall make funds available in its current account to meet all monthly repayments by 31/01/2013. A cursory look at the loan agreement shows that the customer/borrower was granted two limits in the facility letter: (i) a loan of GHC 742,640.00to finance 70% of the purchase price of 4 Homo 6X4 trucks Mining Dump Trucks); (ii) GHC 100,000.00 Local Bills discounted for jobs executed for AngloGold Ashanti. All these were private arrangements made by the Plaintiff to enable him satisfy the requirements of the contract which he was bidding from AngloGold Ashanti. In other words, these arrangements were for the benefit of the customer and not AngloGold Ashanti. It is for this reason that the Plaintiff has not complained about the second limit in the nature of local discounting bills facility. The defendant herein never assumed any obligations under the loan agreement by agreeing to issue cheques in the joint names of the customer and SCB in a letter written to SCB, exhibit H. In any case, there is no evidence before this court that SCB has complained that AngloGold Ashanti (AGA), failed to issue cheques due for payment to the Plaintiff contrary exhibit ‘H’. Exhibit ‘H’, dated 11/12/2012, is a letter written by AngloGold Ashanti and addressed to the Branch Manager of SCB, Obuasi. It reads:
ASSIGNMENT OF RECEIVABLES.
We refer to Solkroc Limited’s letter dated 17th November, 2012, instructing us to pay all their cheques in the joint name of your bank. We are therefore, effective this dated going to ensure that Solkroc invoices are paid in the joint name of SOLKROC LIMITED AND STANDARD CHARTERED BANK GHANA LIMITED.
Please note that this letter is not a guarantee for your financing arrangements. (Emphasis mine)
Sgd. Isaac Opoku-Gyamera
Snr. Manager-Finance, Obuasi Mine.
CC: MD- Solkroc Limited
Chief Accountant AGA
Finance Manager-AGA (P/R)
The Plaintiff’s letter of 17/11/2012, to which exhibit ‘H’ refers, was not put in evidence. The heading of exhibit ‘H’, that is “Assignment of Receivables”, is quite deceptive compared to the content of the letter. Counsel for the Plaintiff is right in his argument that the Defendant had knowledge of the loan taken by the Plaintiff, but it must be stressed once again that possession of knowledge of the credit facilities advanced to the Plaintiff, coupled with the agreement to issue cheques in the joint names of the customer and SCB does not create any liabilities on the Defendant as far as the loan agreement itself is concerned. Indeed, AGA made its stance clear that exhibit ‘H’, was not meant to be a guarantee for the Plaintiff’s financing arrangements. After the Plaintiff had voluntarily incurred those pre-contractual expenditures, the parties herein eventually executed Contract C4033 voluntarily, with their eyes widely open. It has not been demonstrated to the satisfaction of this court that the Defendant misrepresented any facts to the Plaintiff, either before, or at the time of executing the contract. Contrary to the Plaintiff’s assertions and subsequent evidence that the Defendant did not fully produce the agreed Ore and Waste Material to be hauled under the contract, its own Annexure A of exhibit ‘A’ tells a contrary story. This annexure A is a schedule of rates and estimated quantities of Ore and Waste Materials from the Obuasi Mine Shafts, which per note ‘3’, is only indicative. In the absence of fraud, misrepresentation, mistake and the like, the parties are bound by their true intentions as expressed in contract C4033.
The argument by counsel for the Plaintiff that the Defendant ought to have known of the impending operational challenges which culminated in the termination of the contract is untenable. In note ‘3’ of Annexure A, it is clearly stated that ‘quantities provided in the table above are only indicative in nature and shall vary based on actuals”. So, if the Defendant’s workmen went underground but could not get the targeted Ore and Waste material, the Defendant does not incur any liabilities. It is for this reason that the Plaintiff never complained about actual quantities hauled until the contract termination issue came up. In any case, the Defendant was not bound to give reasons for the termination of contract C4033 on the face of the agreement. The Plaintiff, having accepted all the terms and conditions of contract C4033, knew, or ought to have known, of the implications of the Termination Clauses. The Defendant was very magnanimous in disclosing the reasons for the termination to the Plaintiff because it was not bound to do so under the agreement. Contrary to the suggestion by counsel for the Plaintiff that the reasons were deliberately crafted so as to terminate the contract, this court after weighing the evidence of the parties finds that the reasons for the termination given by the Plaintiff are tangible as they reflect the Defendant’s operational challenges which called for the restructuring of its operations. The court also finds that the series of discussions held between the parties, followed by the exchange of correspondences and eventually the extension of the termination date from 16/10/2014 to 25/11/2014 are sufficient evidence of the fact that the Defendant was not acting unfairly or in bad faith.
The Plaintiff duly acknowledged and appreciated the challenges on the ground as can be reasonably inferred from its exhibit G3. Exhibit G3 dated 09/10/2014 is a letter from the Plaintiff addressed to the Senior Manager Commercial, AGA, Obuasi. It reads:
TERMINATION OF SURFACE TRUCKING OF ORE AND WASTE MATERIAL FROM VARIOUS SHAFTS- CONTRACT C4033.
Further to our discussions on your termination notice in respect of the above mentioned contract we write to acknowledge receipt of your letter dated 16th of September 2014 informing us of the termination of the contract on 16th October, 2014 and confirm that we shall liaise with the manager surface mining to ensure an orderly closure of the contract. We also acknowledge the fact that quantities of the materials to be transported from the shafts shall reduce considerably after 15th of November 2014 and the extension of the above mentioned contract to the 25th of November, 2014.
Sgd. Solomon Mensah
The Plaintiff’s exhibit G1 which is an email addressed to one Mark Morcombe and two others, dated 01/05/2015, in which the Plaintiff claimed that the Defendant failed to supply the agreed ore and waste material for haulage during the contract period, and that the dump trucks purchased cannot be used for haulage on any of the mines in Ghana do not in any way affect the Defendant’s right to terminate the contract at its discretion under contract C4033. Those assertions are even false because per the evidence before this court, and to the knowledge of the Plaintiff, the values stated in the contract were only indicative in nature and not actuals. That apart, the evidence shows that the Plaintiff had eight of the dump trucks before he was awarded contract C4033, the question is, what was the Plaintiff doing with those dump trucks before he was awarded the contract in issue? It does not even make business and economic sense for a contractor to purchase trucks that can be used in the shafts of only one mining company in Ghana. Certainly, those assertions and evidence from the Plaintiff are afterthoughts.
Besides the documentary proof of the Defendant’s right to terminate the contract at its discretion by giving the requisite notice, the Plaintiff’s Managing Director also admitted whilst being cross-examined, that the Defendant was entitled to terminate the contract in terms of clause 25 of exhibit A; and he was also given an opportunity to rent out the Plaintiff’s trucks to another contractor who was into a similar haulage business but he turned it down because he would have been paid at a lower rate. The following transpired between the Plaintiff’s Managing Director and counsel for the Defendant on 27/02/2018:
Q. The contract document, Exhibit A, provides in clause 25, page 16 the various modes of termination, is that the case?
A. That is correct but it does not mean that you can easily terminate my contract for no cause when you have given me a three- year contract and you have caused me to purchase dump trucks.
Q. One of the modes was to give you one-month notice of termination?
A. That is correct.
Q. And that is exactly what the Defendant did in terminating the contract?
A. That is correct but it does not mean they should terminate the contract.
Q. Apart from one- month notice, the Defendant held meetings with you and all other contractors like you, you were there?
A. That is correct, I was present. At times they called me separately for the termination of the contract and I pleaded with them to give me more contract so that I can pay off the loan.
Q. And in those meetings, it was explained to you and also you knew that the underground production had been suspended and many other operations of the Defendant?
A. They told me of the problems. I also told them if they knew of such problems they should not have given me a three-year contract based on which I took the loan. I requested that they give me other surface contracts but they told me to rent out my trucks to another contractor by name Ramot Services but I refused.
Q. In clause 25 of exhibit ‘A’, you agreed to the term that the contract could be terminated as the discretion of the Defendant and you signed it?
A. I agreed to that but that does not mean that they can just terminate the contract after I had purchased the trucks…
Q. Exhibit A did not oblige the Defendant to by all means offer you another contract upon termination?
A. That is so. I was not imposing it on them but due to the circumstances I found myself in I was compelled to write that letter.
Q. It was out of that plea that the Defendant suggested to you the option of co-operating with contractors who had some surface work to do?
A. That is correct, they told me. However, that contractor also has same equipment and if I rent mine to him the rate he will give me will be lower…
By the Plaintiff’s own showing, the Defendant terminated the contract by exercising its right to do so under clause 25.3 of exhibit ‘A’. Having exercised that contractual right of termination, the Defendant further recommended ways by which the Plaintiff could mitigate his losses but he failed to avail himself of that. It does not therefore lie in the Plaintiff’s mouth to say that the Defendant has unfairly breached the contract described as C4033 by exercising its contractual right of termination with notice. The Plaintiff has therefore failed to satisfy the mind of the court that the Defendant unfairly breached the contract in issue. The court concludes that the contract between the parties was validly terminated in a manner agreed by the parties thereto.
WHETHER OR NOT THE PLAINTIFF IS ENTITLED TO ITS RELIEFS.
Having found that the contract was validly terminated by the Defendant, the Plaintiff’s relief for a declaration that the Defendant’s act of termination amounts to an unfair breach of contract cannot succeed. Also, the Plaintiff’s claim for general and special damages for breach of contract cannot stand because there has not been any breach of contract at all. The Plaintiff is neither entitled to recover any monies for the unexpired term of the contract, nor to be compensated for the cost of equipment purchased before the contract, which the Plaintiff Company warranted that they were free from any liens, encumbrances, and the like. Per clause 25.3.4, all what the Plaintiff was entitled to was any sum due and payable for expenditure and liabilities properly incurred. This does not extend to the purchase of equipment by the Defendant prior to the execution of the contract. However, works actually carried out by the Plaintiff, together with the ancillary expenses, which had not been paid for, had to be paid. Beyond that, the Plaintiff was not entitled to any payment of whatsoever nature. This is further supported by clause 25.6 of exhibit ‘A’ that:
Notwithstanding anything stated or implied in the contrary, it shall be an express condition of the contract, that where notice of termination has been properly served in writing, the employer will not be liable for any cost of whatsoever nature incurred by the contractor subsequent to the Termination Date.
With full knowledg0e of this clause, the plaintiff ought to have taken reasonable steps to avoid incurring further expenses by continuing to engage drivers if it did not need them. Information about the nature of employment contract which the Plaintiff had with his dump truck operators was suppressed from the court. In any case, per paragraph 3 of the Plaintiff’s witness statement, the Plaintiff is engaged in haulage and plant hire business in the mining industry. This presupposes that the Plaintiff had drivers ready, and able to operate its trucks being part of the existing fleet, even before the execution of the contract in issue. So, if the Plaintiff continued to pay its drivers whom it uses to do its usual plant hire business after the contract C4033 had been validly terminated, it cannot by any stretch of imagination pass on those costs to the Defendant. In effect, the Plaintiff is not entitled to any of the reliefs it seeks. What would have been the position if the Defendant had in fact breached the contract? In other words, would the pre-contract and post-contract expenses or loss of expected profit been recoverable? A couple of English cases will be looked at.
Tindal CJ in Hodges v Earl of Litchfield (1835-42) All ER 551 at 552,553 categorically stated that:
The expenses preliminary to a contract ought not to be allowed. The party enters into them for his own benefit at a time when it is uncertain whether there will be any contract or not.
The court considered that to be expenditure thrown away and not recoverable.
But, Denning MR, in delivering the judgment in the appellate court, took a contrary view in Anglia Television Ltd v. Reed (1971) 3 All ER 690. In the end, their Lordships dismissed the appeal and affirmed the decision of Master Elton who had ordered recovery of the pre-contract expenditures, among others, in the light of the breach of contract by the Defendant.
Briefly, the facts of that case are that the Plaintiff, a Television Company decided to make a film for television. Before they had engaged an actor to play the leading man, they incurred expenditure amounting to 2, 750 pound, in employing a director, a designer, a stage manager and an assistant stage manager. Afterwards, they engaged a reputable American actor, who undertook to play the leading man. The Defendant, the actor, was unable to travel to England to make the film and he repudiated the contract. The Plaintiff could not find a substitute to play that leading role, they accepted the repudiation and sued the Defendant for breach of contract claiming as part of the damages the wasted expenditure incurred before the contract was made.
At page 692 of the report, Denning MR stated:
It seems to me that a Plaintiff in such a case as this had an election : he can either claim for his loss of profits; or for his wasted expenditure. But he must elect between them. He cannot claim both. If he has not suffered any loss of profits- or if he cannot prove what his profits would have been- he can claim in the alternative the expenditure which has been thrown away, that is, wasted , by reason of the breach.
If the Plaintiff claims the wasted expenditure, he is not limited to the expenditure incurred after the contract was concluded. He can claim also the expenditure incurred before the contract, provided that it was such as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken.
This court is persuaded by the decision in the above cited case, in the sense that where there is a breach of contract, the affected party should be able to recover either the wasted expenditure incurred (before or after the contract) if such expenses were reasonably in the contemplation of the parties; or the loss of expected profit/income if that can be readily ascertained, but not both. The affected party will be over compensated if that party is allowed to recover both the wasted expenditure and loss of expected profit. Unfortunately, the Plaintiff before this court cannot recover under any of these heads simply because there has not been of breach of contract by the Defendant. It appears to this court that the Plaintiff instituted this action to somehow coerce the Defendant to give it another contract. But, the defendant is not under any obligation to award contracts to potential contractors on a silver platter without going through the bidding process.
The Plaintiff’s action is very frivolous, unmeritorious and fails in its entirety. In awarding cost, this court has considered the provisions of Order 74 of C.I. 47 on the award of costs and the submissions made by counsel. The court awards costs of GHC 5,000.00 against the plaintiff in favour of the defendant.