IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT(COMMERCIAL DIVISION)
ACCRA - A.D 2016
J. ADDISON & CO. LTD - (PLAINTIFF)
THE MINISTER, MINISTRY OF EDUCATION - (Defendants) THE ATTORNEY-GENERAL & MINISTER OF JUSTICE
DATE: 20TH JULY 2016
SUIT NO: RPC/81/14
JUDGES: JENNIFER DODOO (MRS) JUSTICE OF THE HIGH COURT
G. S. K. BABANAWO FOR PLAINTIFF
AKAWARI ATINDEM FOR DEFENDANTS
The Plaintiff issued a writ against the Defendants claiming the following reliefs:
a. The sum of GH¢18,458.29 being the final payment after the completion of the project.
b. An amount of GH¢63,605.17 being the interest on the delay payments owing and due to the Plaintiff
c. Interest on the said amount of GH¢63,605.17 from 20th November 2013 to the date of final payment.
d. General Damages for the delay in the payment of the Contract sum and the interest leading to the Plaintiff being indebted to Sahel-Sahara Bank and Unibank which financed the construction of the project.
The Plaintiff, a limited liability company stated in its claim that it was awarded a contract to put up a 2 storey dormitory block for 220 students at Benkum Senior High School in the Akwapim North District. The project was to be completed within 12 months. According to the Plaintiff, the project was duly completed and handed over to the 1st Defendant. It contended that the 1st Defendant had breached the terms of payment encapsulated in Paragraph 43.1 of the Contract Document. The Plaintiff particularized these terms as follows:
43.1 Payments shall be adjusted for deductions for advance payments and retention. The Employer shall pay the Contractor the amounts certified by the Project Manager within 28 days of each certificate. If the Employer makes a late payment, the Contractor shall be paid interest on the late payment in the next payment. Interest shall be calculated from the date by which the payment should have been made up to the date when the late payment is made at the prevailing rate of interest for Commercial borrowing for each of the currencies in which payments are made.
The Plaintiff averred that the 1st Certificate was issued on 8th July 2011 and payment was effected on 24th August 2011, 18 days after the 28 days grace period for which payment should have been made had elapsed. The Plaintiff averred further that the 2nd Certificate was not applicable as it was payment for advance mobilization. Then the 3rd Certificate was issued on 15th December 2011 and payment was effected on 16th March 2012 which constituted a delay of 62 days after the expiration of the 28 day grace period. The 4th Certificate was issued on 12th June 2012 and payment effected on 10th September 2012 amounting to a 61 day delay. The 5th Certificate was issued on 16th November 2012 and payment made on 18th October 2013, a 307 day delay after the grace period of 28 days.
The 6th Certificate was issued on 28th March 2013 and payment made on 20th November 2013, a 219 day delay after the expiration of the 28 day grace period.
The Plaintiff’s complaint was that although the agreement was that interest on the late payment ought to be calculated from the date by which the payment should have been made up to the date when the late payment was made at the prevailing rate of interest for commercial borrowing for each of the currencies in which payments are made the 1st Defendant failed to follow the laid down formula. Instead, what the 1st Defendant did was to pay the amount on the certificate without calculating and adding the interest on the previous late payments. The total amount of interest on delay payment was given as GH¢63,605.17. The Plaintiff also stated that the final payment of GH¢18,458.29 on completion of the project still remained outstanding.
The Defendants in their amended defence contended that the 1st Defendant only paid certificates certified by the Project Manager pursuant to paragraph 43 of the agreement. They contended further that the Plaintiff was required to raise the issue of interest on the delayed payment with the Project Manager to be added to subsequent payments in accordance with paragraph 43 of the Contract. If the Project Manager failed or refused to add claims made by the Plaintiff, paragraph 25 of the Agreement gave the Plaintiff the opportunity of challenging this refusal. The Plaintiff however failed to take advantage of this clause.
The Defendants argued that the Plaintiff was estopped from claiming interest after it had taken the sum due it and for allowing time to elapse in order to reap more. They stated also that the Plaintiff had waived its right to claim interest after receiving the first payment and neglecting to put in a claim for the interest.
The issues set down for trial were:
1. Whether the Plaintiff is entitled to the payment of interest on the delay payments owing Plaintiff being an amount of GH¢63,605.17?
2. Whether or not the Plaintiff raised the matter of interest with the Project Manager to be added to the next payment in accordance with Clause 43 of the Contract?
3. Whether or not the Plaintiff referred the matter of interest to the adjudicator in accordance with clause 25 of the contract if the Project Manager failed to add the interest upon request to do so?
4. Whether or not the Plaintiff has waived his right to be paid interest once he failed to notify the Project Manager or refer the matter to the adjudicator?
The Plaintiff gave evidence through its Managing Director. He told the court the Company was to be paid within 28 days of it submitting a payment certificate. However the payment on the 1st Certificate delayed for 48 days on presentation, the 3rd payment delayed for 90 days, 4th payment delayed for 85 days, 5th payment delayed for 335 days, 6th payment for 295 days and 7th payment delayed for 290 days.
Exhibit F is titled Details for Computation of Interest Rate. The total interest rate on delayed payments claimed is GH¢63,605.17. Section 43.1 and 2 which deal with delayed payments are as follows:
Payments shall be adjusted for deductions for advance payments and retention. The Employer shall pay the Contractor the amounts certified by the Project Manager within 28 days of each certificate. If the Employer makes a late payment, the Contractor shall be paid interest on the late payment in the next payment. Interest shall be calculated from the date by which the payment should have been made up to the date when the late payment is made at the prevailing rate of interest for Commercial borrowing for each of the currencies in which payments are made.
If an amount certified is increased in a later certificate or as a result of an award by the Adjudicator or an Arbitrator, the Contractor shall be paid interest upon the delayed payment as set out in this clause. Interest shall be calculated from the date upon which the increased amount would have been certified in the absence of dispute.
Section 4:3 of Exhibit A also states:
Except where otherwise specifically stated, the Project Manager will decide contractual matters between the Employer and the Contractor in the role representing the Employer.
Furthermore, Section 42:2 states:
The Project Manager shall check the Contractor’s monthly statement and certify the amount to be paid to the Contractor.
Then Section 42:5 states:
The value of work executed shall include the valuation of Variation and Compensation events.
It is apparent from the foregoing sections that all amounts to be paid to the Contractor by the Employer must be amounts certified by the Project Manager. The Project Manager is defined in the interpretation section at page 47 of Exhibit A as; the person named in the Contract data (or any other competent person appointed by the Employer and notified to the Contractor, to act in replacement of the Project Manager) who is responsible for supervising the execution of the Works and Administering the Contract).
Therefore the Plaintiff’s request for delayed payment in the first instance should have been reported to the Project Manager whose responsibility it was to certify payment in the subsequent certificate. Did the Plaintiff bring the delayed payments made by the Employer to the attention of the Project Manager? In cross-examination of the Plaintiff on 2nd July 2015 the following transpired:
Q. Do you have anything in your possession to suggest that you made a request to the consultant over the alleged delayed payment?
A: Yes. I do.
Q: Do you have anything in your possession?
A. No. They themselves are aware of the Company’s frequent approach for money interest on late payment as well as the Chief Director of Ministry of Education whom my lawyer has written to advise the Project Manager on the project to calculate and pay for the interest.
Q. So in essence you do not have anything to show that you made a request to the consultant am I right?
A: Yes. It was in my letter written to the Chief Director of Education.
Q: So do you have anything showing that you made a request to the Consultant?
A. No we made several approach which they are aware and refusing interest on delayed payment which forms part of the contract agreement.
PW1 who described himself as the Quantity Surveyor to the Project Manager told the court that his role was to prepare and advise all payments due to the Plaintiff under the contract. He said although the Plaintiff complained to him informally about delay in payments to him, there was never an official complaint made in writing on the subject. He said he had never been called upon to calculate interest on delayed payment for Plaintiff’s benefit.
In his examination-in-chief the following was elicited:
Q: Has the project sum been paid?
A. My Lord, we have paid the contractor all the works executed on site to date.
Q. Were these payments made on time?
A. When we submit payment to the Ministry of Education, our job ends there. I may not be able to tell the court if all payments were made on time or not.
Q. Now as the quantity surveyors to the Project Manager were you given the contract document between the Plaintiff and the Defendant?
A: Yes. We had a copy.
Q. So per your work you should be in a position to know whether the payment to the Contractor was delayed or not?
A. When we prepared certificates for payment and submit to the client for payment, the responsibility of payment lies with the client. We do not follow up again.
Q. Take a look at this document, Exhibit A section 43:1. Can you read Section 43:1?
A. Witness reads document
Q. Based on this, did the contractor ever complain to you about the non-payment of interest regards to the works, the delayed payments/
A. Yes, the contractor has complained and had discussions on delayed payment before.
Q. Has he written any formal letter to complain?
A. My Lord, I have not sighted formal letter personally.
Q. So in all the claims you made by the contractor you have never calculated interest on delayed payment?
A: No My Lord.
Q. Per section 43 of the contract document does the Contractor have to apply for interest to be paid before such payments are made?
A. Yes the Contractor has to apply for any payment and this payment shall be vetted by the Project Manager before certification.
Q. Can you take a look at the contract document. Is that what is stated in the contract document section 43?
A: Section 43 talks about payment only.
Q: Who is required per section 43 to make payments to the contractor?
A. The payments are to be made by the employer. And the Employer pays what is certified by the Project Manager.
Q. So section 43 is not talking about the Contractor applying for the payment of interest?
A. Yes My Lord. However our procedures do lay on only clause 43.
In cross-examination the following was also elicited from PW1:
Q. I am sure you are familiar with clause 43:1 which deals with payments. The 3rd paragraph says if the Employer makes a late payment the contractor shall be paid interest on the payment in the next payment. Is the interest calculated automatically by the Employer?
Q: Can you tell the court what happens?
A. If the contractor believes he has a claim, he has to present these claims to the Project Manager for vetting and payment.
Q. So there is no link between the between the Contractor and the Employer?
Q. Who calculates the interest?
A. The Contractor presents his claim or calculations to the Project Manager for vetting and payment.
Q: So to the best of your knowledge did the Plaintiff put in any claim for interest?
A, I remember the Contractor presented something but that was after the case was in court.
Q. So no claims were made during the pendency of the contract?
A. No. I don’t remember.
From Exhibit F i.e. (Details for Computation of Interest Rate) tendered in evidence by the Plaintiff, the 1st certificate was presented on 8th July 2011 but payment was made on 24th August 2011. There was according to Exhibit F, a delay of 18 days in making payment.
The next certificate which was presented on 15th December 2011 was delayed by 62 days. The Plaintiff did not tell the court what steps he took to ensure that the interest for delayed payment made on 24th August 2011 was brought to the attention of the Project Manager to be factored in the 15th December 2011 certificate. The 4th Certificate presented on 12th June 2012 was delayed according to Exhibit F by 61 days. The 5th Certificate presented on 16th November 2012 was delayed also according to Exhibit F by 307 days and the 6th
Certificate presented on 28th March 2013 was similarly delayed by 218 days. The Plaintiff also did not set out the steps he took for the interest payments to be calculated and factored in these subsequent certificates. In failing to bring the details of the delayed payment to the attention of the Project Manager, the Plaintiff disabled the whole process of calculating interest and of certifying same for same to be paid in the subsequent certificate.
Despite the alleged delays in payments made over the years, it was only on 2nd July 2013 that the Plaintiff made an official complaint in writing not to the Project Manager who was responsible for certifying all payments but to the 1st Defendant. This was tendered in evidence as Exhibit B. The contents of this letter are:
THE CHIEF DIRECTOR
MINISTRY OF EDUCATION
CONSTRUCTION OF 2 STOREY DORMITORY BLOCKS AT BENKUM SENIOR HIGH SCHOOL LARTEH-AKUAPEM –(SHS/DM/LOT 28)
We write with reference to the above named contract which was awarded to us on 14th February 2011 and completed in March 2013.
You may recall that on 16th November 2012 we submitted Certificate No. 5 for GH¢112,627.35 and No. 6 for GH¢100,406.69 to you for payment but the amount has not been paid to date although the two certificates were certified by you to Ministry of Finance for payment.
In view of the non-payment to us of the above sums, we have come under serious financial pressure from our bankers and suppliers. We kindly request that these amounts be paid to us.
The Plaintiff in Exhibit B never complained about delayed payment in respect to certificates numbers 1-4.
Thereafter on 13th December 2013 and on 2nd January 2014, the Plaintiff instructed his
Solicitors to write Exhibits D and E to the 1st Defendant making a demand for interest on delayed payment. The certificates had however been issued for payment between July 2011 and March 2013 and there had been no indication within these certificates that interest had been computed on delayed payments following the Plaintiff’s request for same.
The court finds from the evidence that the Plaintiff never brought up the issue of delayed payments formally in writing to the attention of the Project Manager. From PW1’s evidence, once the certificate had been issued, the Project Manager would not have known that there had been a delay on payment for interest payments to be made. It was therefore incumbent on the Plaintiff to have made representations to the Project Manager giving him details of the date the certificate was issued and the date payment was actually made. Then the Project Manager would have been in a position to calculate the requisite interest to be added to the other certified payments in the subsequent certificate. The evidence before the court did not show that the Plaintiff had applied for interest on delayed payments. The Plaintiff should have brought the delayed payment on each certificate to the attention of the Project Manager for action to have been taken. He failed to do so. Having failed to do so, he then presented Exhibit F, his own calculations on what was due to him by way of interest on delayed payments not during the currency of the contract, but when the suit had been instituted in court.
Exhibit A, the Contract Document also provided a dispute resolution mechanism in sections 24 and 25. These provisions are as follows:
24:1 If the Contractor believes that a decision taken by the Project Manager was either outside the authority given to the Project Manager by the Contract or that decision was wrongly taken, the decision shall be referred to the Adjudicator within 14 days of the notification or the Project Manager’s decision.
25:1 The Adjudicator shall give a decision in writing within 28 days of receipt of a notification of a dispute.
The evidence does not show that the Plaintiff made representations to the Project Manager on the issue of interest on delayed payments. Had he done so and had the Project Manager refused to consider the matter, the Plaintiff could have made a case before for his reliefs before an Adjudicator. The issues of whether or not the Plaintiff raised the matter of interest with the Project Manager to be added to the next payment in accordance with Clause 43 of the Contract and whether or not the Plaintiff referred the matter of interest to the adjudicator in accordance with clause 25 of the contract if the Project Manager failed to add the interest upon request to do so are answered in the negative. This leads to the next issue to be considered which is:
Whether the Plaintiff is entitled to the payment of interest on the delayed payments owing Plaintiff being an amount of GH¢63,605.17?
As stated above, the only evidence on delayed payment is Exhibit F. This was a document procured by the Plaintiff. The Plaintiff did not tell the court how he came to be in possession of Exhibit F. Exhibit F had not been prepared by the Project Manager and did not come from official sources. It was not authenticated by PW1 as being a true reflection of what really transpired resulting in delayed payments. The Project Manager was only informed about the Plaintiff’s request for interest on delayed payments when the matter was already before court. There was no way a certification of the Plaintiff’s claims could have been made in the circumstances.
In the case of Atadji v. Ladzekpo (1981) GLR 219 the court held that whenever the testimony of a party on a crucial issue is in conflict with the testimony of his own witness on that same issue it is not open to a trial court to gloss over such a conflict and make a specific finding on that issue in favour of the party whose case contains the conflicting evidence on the issue.
See also the case of Manu v. Nsiah (2005/2006) SCGLR 25 where the court stated that the well established rule was that where the evidence of a party on a point in a suit is corroborated by witnesses of his opponent, whilst that of his opponent on the same issue stands uncorroborated even by his own witnesses, a court ought not to accept the uncorroborated version in preference to the corroborated one unless for some good and apparent reason the court finds the corroborated version incredible impossible or unacceptable.
The Defendants’ evidence that the matter of interest on delayed payment was never brought to their attention during the pendency of the contract, has been corroborated by the Plaintiff’s own witness PW1 who was mandated to prepare certificates for payment.
The 1st Defendant in effecting payment would only do so after certification by the Project Manager of the figures captured on the certificate presented for payment.
In view of this, the court finds that the Plaintiff never brought the issue of delayed payments to the Project Manager’s attention for same to be vetted and certified. As a result, the delayed payment could not be factored into the payments certified in subsequent certificates. This state of affairs could not be blamed on the Defendants. See the case of Dunlop & Ranken Ltd v. Hendall Steel Structures Ltd (1957) 3 AER 344 @ 347 where the court held thus:
A contractor who has all the expense of materials and labour wants money from time to time, and it is perfectly clear that, until the architect has given a certificate, the contractor has no right at all to receive any sum of money from his employer by what I may call a drawing on account. Until the contractor can produce to the building owner a certificate from the architect, the contractor cannot get anything. It is generally left entirely to the architect to decide when he would certify, though some contracts provide that he shall certify at a particular time and for what amount he shall certify. …. In the case for example of a building contract in RIBA form, where the builder is paid on the certificate of the architect, it is plain that money in the hands of the building owner cannot be attached until a certificate is issued and then only for the amount mentioned in that certificate.
The Plaintiff in his address has argued that the calculation of interest has nothing to do with the Project Manager but is done by the Consultant. The Plaintiff did not lead any evidence to show that it was the Consultant who produced Exhibit F and that it was the Consultant’s duty to compute interest on delayed payments.
The Plaintiff in this contest bore the burden of production of evidence and persuasion concerning the fact that an amount of GH¢63,605.17 was due and owing to it. Exhibit F which contained the details for computation of interest rate has not been certified or attested to as coming from any organization. Who did the computation and did it emanate from the Project Manager or any Consultant? Was it meant to be an official record and therefore covered by Section 126(1) of the Evidence Act, 1975 (NRCD323)? One cannot tell on the face of the document. Section 126(1) states:
Evidence of a hearsay statement contained in a writing made as a record of an act, event or condition is not made inadmissible by section 117 if –
(a) The writing was made by and within the scope of duty of a public official;
(b) The writing was made at or near the time the act or event occurred or the condition existed; and
(c) The sources of information and method and time of preparation were such as to indicate that the statement contained in the writing is reasonably trustworthy.
Although the law does not require a party to prove its case with absolute certainty in civil proceedings, a court must satisfy itself that the evidence led on a particular issue is proved in accordance with the standard required by law. See Acquie v. Tijani (2012) 2 GLR 1252 @ 1258.
Since there is no way of verifying the Plaintiff’s claim for GH¢63,605.17 from Exhibit F, this court does not see its way clear in awarding unverified and uncertified amounts. The Plaintiff has not discharged the burden of proof on a balance of probabilities.
In Fosua & Adu-Poku v. Dufie (deceased) and Adu-Poku Mensah (2009) SCGLR 316, the court held that Section 11(4) of the Evidence Act, 1975 NRCD 323 put the obligation in civil proceedings of producing evidence on a party to produce sufficient evidence so that on all the evidence, a reasonable mind could conclude that the existence of the fact was more probable than its non-existence.
The burden of persuasion and the obligation to adduce evidence are defined in Sections 10(1) and 11(1) of NRCD 323.
For the purposes of this Act, the burden of persuasion means the obligation of a party to establish a requisite degree of belief concerning a fact in the mind of the tribunal of fact or the court.
For the purposes of this Act, the burden of producing evidence means the obligation of a party to introduce sufficient evidence to avoid a ruling against him on the issue.
In other circumstances the burden of producing evidence requires a party to produce sufficient evidence which on the totality of the evidence leads a reasonable mind to conclude that the existence of the fact was more probable than its non-existence.
The Plaintiff did not take steps to enforce his rights under the contract. Having not done so and having not followed the procedure in the contract in enforcing his rights, he has failed to establish that he is entitled to the amounts he is claiming.
The Plaintiff also did not lead any evidence in support of his claim for GH¢18,458.29 being the final payment after the completion of the project. The claim would be deemed abandoned.
Consequently the claims before the court fail and are dismissed.
Costs of GH¢10,000.00 is awarded against the Plaintiff.
JENNIFER A. DODOO
JUSTICE OF THE HIGH COURT