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Contract -
Agreement - Parliamentary
approval - Credit facility -
Sale and servicing of motor
vehicles – Setting aside -
Default judgment - Indebtedness
- Calculation of interest -
Whether or not Plaintiffs and
Defendants have any credit
agreement with any mode of
calculating interest upon
default - Whether or not
Defendants are indebted to
Plaintiffs – Whether or not of
the Court of Appeal failed to
appreciate that the basis of
Plaintiffs’ claim was a valid
and “credible Contract” -
Whether or not the extension of
credit facilities to a
government Ministry in relation
to services rendered to that
Ministry is equivalent to a loan
HEADNOTES
The plaintiff
averred that, it had accepted
the Ministry’s request for a
credit facility and entered into
an agreement with the defendants
regarding the sale and servicing
of motor vehicles by it and
there was an issue as to the
exact sum due and the interest
rate to be applied in relation
to the unpaid indebtedness. At
the trial evidence was heard
from the plaintiff’s witness and
a referee who had been
appointed, during the pre-trial
settlement stage of the
proceedings, by the Court to
enquire into the accounting
differences between the
parties. However, the defendant
offered no evidence and did not
participate in the trial,
although he had notice of it,
after the trial, the learned
High Court judge held that the
plaintiff had failed to prove
the terms of any credible
agreement with the Ministry
which should lead to the sum
claimed. The learned trial judge
did, however, find that the
defendant had used the
plaintiff’s services between
January 1994 and November 1998
and some payments had been made,
leaving a balance Since there
was no evidence of payment of
that debt, she ordered defendant
to pay the outstanding debt with
interest on it at the prevailing
commercial banking interest
rate, dissatisfied by the
judgment of the learned trial
judge, the plaintiff appealed to
the Court of Appeal which
unanimously dismissed the
appeal. Accordingly, all the
grounds argued by the appellant
are dismissed. However, before
concluding this judgment, we
need to advert to an issue that
was raised by the respondent in
his Statement of Case. Although
we have held above that the
alleged agreement between the
parties on interest calculation
was not a binding contract, the
respondent nevertheless claimed
that the purported agreement was
a loan agreement within the
purview of
Article
181(3) of the 1992 Constitution
and without
Parliamentary approval it
was invalid. Having held that
the purported agreement was not
a binding contract, there is no
need to deal with this
constitutional issue fully.
However, it is worth pointing
out that
the extension of credit
facilities to a government
Ministry in relation to services
rendered to that Ministry is
not, in our view, equivalent to
a loan. The appeal is
dismissed and the judgment of
the Court of Appeal affirmed
HELD
STATUTES
REFERRED TO IN JUDGMENT
Court (Award
of Interest and Post Judgment
Interest) Rules, 2005 (CI 52)
Article 181(3)
1992
Constitution
CASES
REFERRED TO IN JUDGMENT
BOOKS
REFERRED TO IN JUDGMENT
DELIVERING
THE LEADING JUDGMENT
DR. DATE-BAH
JSC
COUNSEL
ADDO ATUAH
FOR THE APELLANT.
PEARL
AKIWUMI SIRIBOUR ( PRINCIPAL
STATE ATTORNEY ) WITH MRS.
YVONNE AWOONOR-WILLIAMS
(ASSISTANT STATE ATTORNEY) FOR
THE RESPONDENT
________________________________________________________________________________________
J U D G M E N T
________________________________________________________________________________________
DR. DATE-BAH JSC
This is an
action brought by a car dealer
in respect of outstanding sums
owed it for the servicing of the
motor vehicles of the Ministry
of Information. While the fact
of the plaintiff’s services
having been rendered to it was
admitted by the Ministry,
there was
an issue as to the exact sum due
and the interest rate to be
applied in relation to the
unpaid indebtedness.
The plaintiff
in its Statement of Claim, filed
on 31st January 2008,
averred that, by a letter of 27th
January 1997, it had accepted
the Ministry’s request for a
credit facility and entered into
an agreement with the defendants
regarding the sale and servicing
of motor vehicles by it.
This averment was denied by the
defendant when he eventually
filed his Statement of Defence,
on 10th July 2008,
after succeeding in
setting
aside a
judgment
in default of defence, which
had meanwhile been entered
against him. After the close of
pleadings, the two issues set
down for trial were:
1.
“Whether
or not Plaintiffs and Defendants
have any credit agreement with
any mode of calculating interest
upon default.
2.
Whether or not Defendants are
indebted to Plaintiffs.”
At the trial
before the learned trial High
Court Judge, Her Ladyship
Justice Torkornoo of the
Commercial Division of the High
Court, evidence was heard from
the plaintiff’s witness and a
referee who had been appointed,
during the pre-trial settlement
stage of the proceedings, by the
Court to enquire into the
accounting differences between
the parties. However, the
defendant offered no evidence
and did not participate in the
trial, although he had notice of
it.
In her
judgment
after the trial, the learned
High Court judge held that the
plaintiff had failed to prove
the terms of any credible
agreement with the Ministry
which should lead to the sum
claimed. In the plaintiff’s
writ, its claim was for
“recovery of the sum of GH
14,174,693.12 being outstanding
sums owed Plaintiff as at 31st
January 2008” and interest on
the sums from date of judgment
until date of final payment.
Lecturn
At the trial,
one Harrison Teye testified for
the plaintiff that it had sold
motor vehicles to the Ministry
and provided it with after sales
service. He indicated that the
sale of motor vehicles was for
cash, while the after sales
service was on credit basis
covered by an agreement. He
claimed that the credit facility
agreement was in writing and the
Ministry had accepted it. He
tendered this alleged credit
facility agreement into evidence
as Exhibit A. He also tendered
as Exhibit B an alleged
acceptance of the credit
facility agreement by the
Ministry. Exhibit A is a letter
dated 25th March 1991
addressed to the Chief Director,
Ministry of Information and thus
different from the letter
referred to in the Plaintiff’s
Statement of Claim. It stated
that it was intended to
reiterate a particular term of a
credit facility which the
Ministry was currently enjoying
from the plaintiff as follows:
“All credit
customers must settle their
accounts fully by the 15th
of the month following that
during which the service was
provided.”
It went on to
indicate that in view of the
high interest charge on bank
credit, the plaintiff had
decided that it would pass on
the cost of credit (compound) to
all customers who failed to
perform in accordance with its
credit terms. It then set out
the interest rates the plaintiff
would apply to defaulting
customers as follows:
a)
“Interest rate on the
outstanding amount at the end of
each month 3%.
b)
Loss of use of the outstanding
amount 4%.
c)
Bank and other expenses 0.5%.”
The last
paragraph of the letter was in
the following terms:
“Kindly
confirm your acceptance of the
above by signing, dating and
stamping the copy of this letter
attached hereto as your facility
is being withheld till receipt
of your confirmation.”
The evidence
shows that the Ministry never
signed, dated and stamped a copy
of Exhibit A. Rather, the
evidence given of its alleged
acceptance of the plaintiff’s
offer of credit terms was in the
shape of Exhibit B. On these
facts, the learned trial High
Court judge held that no
contract had been established on
the credit terms alleged to be
binding on the defendant. She
said (at pp. 47-48 of the
Record):
“My
understanding of the plaintiff’s
witness’s evidence is that the
sum presented to this court was
calculated from the terms
outlined in exhibit A. But a
cursory look at exhibit A shows
that it is a letter
communicating a unilateral
decision on how bills to
customers would be calculated
and requesting that acceptance
of the terms should be indicated
by signing, dating and stamping
a copy of the same (this) letter
attached.
No such copy
of the same letter signed, dated
and stamped was presented
showing acceptance of the terms
urged on me as indicating a
contract. Indeed, exhibit B is
in no way a copy of exhibit A.
It is a short note saying ‘we
confirm our acceptance of the
terms of the above credit
facility as outlined therein’.
Is it a response to exhibit A?
There is no date on exhibit B.
It could easily be a response to
a different document because the
clearly outlined response
required by exhibit A to make it
a contract is a signing of the
same letter that exhibit A is.”
Her
conclusion that no contract had
been formed on the basis of
Exhibit A was affirmed by the
Court of Appeal. Ofoe JA said
in the Court of Appeal (at pp.
193-4):
“Exhibit B is
an undated letter which is
purported to have been issued by
the defendant. Not only is this
communication not on the
defendant’s ministry letter
head, as should normally be the
case, but it is also unsigned.
On Exhibit B are certain
signatures which henceforth were
to be the only recognized
signatures by the plaintiff in
any future dealings with the
defendant. The letter also
stated that all invoices, debit
notes, statement of account were
to be sent to the Ag. Chief
Director. The trial judge
refused to give any authenticity
to this letter. I think there
was sufficient evidence on
record for the trial judge to
have reasoned the way she did
refusing authenticity and any
weight to Exhibit B. These are
findings of fact supportable by
the evidence an appellate court
like ours has no legal mandate
to subvert.”
Furthermore,
the learned trial judge pointed
out that Exhibit A was dated
1991, at which time the
Ministry’s indebtedness was
2,689,261.50 cedis. However,
the agreement from which the
indebtedness claimed under the
current action was supposed to
have arisen was entered into in
1997. She further drew
attention to the fact that the
records of indebtedness
submitted by the plaintiff to
the referee appointed by the
court started from 1994. She
accordingly concluded perfectly
logically that the debt standing
at the end of 1994, amounting to
132,233.00 old cedis, had
nothing to do with the letter of
1991. Her decision that the
plaintiff had failed to
establish any agreement that
allowed it to apply the alleged
interest rates set out in
Exhibit A to the debts outlined
in the report of the referee was
thus unexceptionable.
The learned
trial judge did, however, find
that the defendant had used the
plaintiff’s services between
January 1994 and November 1998
and
incurred a
bill of 19,406,371 cedis.
Some
payments had been made, leaving
a balance of 15,636,482.00
cedis as at 15th
April 1999.
Since
there was no evidence of payment
of that debt, she ordered
defendant to pay the outstanding
debt of 1,563.64 Ghana cedis
with interest on it at the
prevailing commercial banking
interest rate from April
1999 to date of final payment.
Dissatisfied
by the judgment of the learned
trial judge, the plaintiff
appealed to the Court of Appeal
which unanimously dismissed the
appeal.
It is from
this decision of the Court of
Appeal that the plaintiff has
further appealed to this Court
on the following grounds:
a)
“The judgment is against the
weight of evidence.
b)
The Learned Justices
of the
Court of Appeal erred when they
failed to appreciate on the
evidence before them that the
basis of Plaintiffs’ claim was a
valid and “credible Contract”.
c)
The Court erred in Law on the
evidence before her when she
failed to properly consider and
construe Exhibit B as an
integral part of Exhibit A and
which exhibits collectively form
the Agreement or Contract
between the Parties.
d)
The Court of Appeal erred when
she affirmed the findings of the
Trial Court setting up a case
for the Defendant/Respondent to
the extent that Exhibit B being
undated and not appearing on an
official Letterhead of 1st
Defendant/Respondent was
invalid.
e)
The Court erred in Law when she
failed to consider and
appreciate the import of the
evidence contained in the Court
Experts’ Report ie Exhibit CW1
and disabled herself thereby
from arriving at a proper
conclusion relative to
Plaintiff/Appellant/Appellant’s
claim.
f)
The Court further erred in Law
when she set up a case for the
Defendant/Respondent/Respondents
on interest calculation despite
the existence of Exhibits ‘A’
and’B’.
g)
The Court patently erred in
affirming the decision of the
Court below, in which despite
clear and ambiguous (sic)
admissions of the debt by the
Defendant/Respondent/Respondents,
the Court below found otherwise.
h)
The Court patently erred in
affirming the findings of the
Court below to the effect that
the
Plaintiff/Appellant/Appellants’
claim was unproven.
i)
The Court exceeded her
jurisdiction and breached the
Rules of Natural Justice thereby
when in the absence of any
evidence on record found that
there had been a collusion
between the Parties in relation
to Plaintiff’s claim.”
The appellant
argued grounds (a) to (d)
together. It complained that
both the trial court and the
Court of Appeal had set up a
case for the defendant that he
himself had not made, in that he
had not denied that there was an
agreement covering the
transactions between the
parties. The appellant argued
that Exhibits A and B did
constitute a valid enforceable
contract and therefore the trial
court’s calculation of interest
on the outstanding debt on the
basis of simple interest was in
error and should not have been
affirmed by the Court of Appeal.
The appellant
expressed dissatisfaction with
the following passage from Ofoe
JA’s judgment (at p. 194 of the
Record):
“Having
rejected the existence of any
contract based on Exhibits A and
B the rate of calculating the
interest at compound interest,
as specified in Exhibit A, was
inapplicable to the debt owed
the Plaintiff by the Defendant.
Such conclusion necessarily
flows from the rejection of the
contention of the Plaintiff that
it has a contract based on
Exhibits A and B. I think it is
necessary at this point to
clarify this position of the
jurisdiction of Mr. Korley in
the assignment that was given
him by the Court. As earlier
mentioned the Court set itself
issues for trial which included
whether there was any credit
agreement between the parties.
This issue is a purely legal
issue not meant and can’t be for
the determination of Mr. Korley,
the court witness. The Court
can’t shirk its statutory
responsibility in determining
this issue to Mr. Korley. The
trial judge was therefore right
in ignoring the computation of
Mr. Korley whose total figure
was based on his believe (sic)
that Exhibits A and B
constituted a contract between
the parties. Whether there was
a concluded contract between the
parties based on Exhibits A and
B is for the court to determine
and not Mr. Korley.”
The appellant
contends that, given the
evidence of Mr. Korley, the
referee appointed by the Court,
and of the plaintiff’s witness
at the trial, the evidence on
record did not support the
finding of the courts below that
the
plaintiff/appellant/appellant’s
claim had not been established.
The appellant states in its
Statement of Case that:
“It is
therefore our respectful
submission that the Court of
Appeal rather erred in affirming
the finding that the claim was
not substantiated by ignoring
the evidence of both PW1 and
that of the referee on the
debt.”
This submission misses the point
of Ofoe JA’s analysis in the
passage from his judgment quoted
above. His point indeed is that
the interpretation of facts to
determine whether they result in
the conclusion of a contract is
a matter of law for a judge to
undertake. Accordingly, the
assumption by the referee that
Exhibits A and B resulted in a
contract and therefore their
terms were to be applied to the
calculation of interest on
the
indebtedness he ascertained
was not binding on the trial
court nor on the Court of
Appeal. He was correct in this
analysis. In these
circumstances, the issue which
calls for discussion is whether
indeed Exhibits A and B do
constitute a contract.
The last paragraph of Exhibit A,
which was earlier quoted in this
judgment, has clear words which
prescribe the mode of
communication of the offeree’s
acceptance of the plaintiff’s
offer. Given those clear words
and the absence of any evidence
of waiver by the offeror
regarding the prescribed mode of
communicating acceptance, that
mode of communication was
binding and the learned trial
judge was justified in
disregarding any purported
acceptance which did not conform
to the prescribed mode of
communication. We would thus
uphold the legal conclusion of
the learned trial judge that
Exhibits A and B did not result
in the formation of a contract.
There being, accordingly, no
contractually determined
interest rate applicable to the
indebtedness of the Ministry
that had been established on the
evidence, it was reasonable for
the learned trial judge to order
the payment of interest on it at
the prevailing commercial
banking interest rate from April
1999 to date of final payment,
which is what the provisions of
the Court
(Award of Interest and Post
Judgment Interest) Rules, 2005
(CI 52) authorize her to do
(See rules 1 and 2 of CI 52).
The Court of Appeal did not,
therefore, err in affirming her
decision on this issue.
The appellant’s argument on
grounds (e), (f), (g) and (h) is
similar to that already
examined. It again relies on
Exhibits A and B being construed
as forming a contract. It notes
that under Rule 1 of the Court
(Award of Interest and Post
Judgment Interest) Rules, 2005
(CI 52), if the parties specify
a rate of interest which is to
be calculated in a particular
manner, then the court shall
award that rate of interest
calculated in that particular
manner. Of course, this
argument also falls down, once
this Court affirms, as it has
done above, the Court of
Appeal’s approval of the learned
trial judge’s conclusion that
Exhibits A and B did not
constitute a contract.
The final ground argued by the
appellant was ground (i). Under
this ground, the appellant
complained about the following
passage from the judgment of
Appau JA:
“The names of the Ag. Chief
Director and the Deputy (with
their alleged specimen
signatures) were merely inserted
in the letter as persons who
would sign for and on behalf of
the 1st
defendant/respondent without
indicating who the author of the
letter was. On the face,
Exhibit ‘B’ appears fake and
unauthentic. I cannot therefore
fathom how the Attorney
General’s office could gloss
over the serious defects in
Exhibit B and commit the State
to the payment of the whopping
sum of over 14 million Ghana
cedis on mere maintenance and
servicing of 1st
defendant/respondents vehicles
when on the evidence, plaintiff
was not entitled to that sum.”
The appellant
maintained that there was not a
shred of evidence to suggest
that Exhibit B was “fake and
unauthentic.” It also pointed
out that the defendant had not
raised any query about the
authenticity of Exhibit B. The
appellant then continued to deny
that there was any collusion
between the parties. It will be
recalled that ground (i) was as
follows: “The Court exceeded
her jurisdiction and breached
the Rules of Natural Justice
thereby when in the absence of
any evidence on record found
that there had been a collusion
between the Parties in relation
to Plaintiff’s claim.”
This claim of
collusion arises from the
assertion in the judgment of the
learned trial judge that a
representative of the defendant
had indicated before her a
willingness to submit to
judgment in the sum of
14,174,693.12 Ghana cedis. This
is what she said (at p. 47 of
the Record):
“Before judgment could be given,
the Attorney-General’s
representative reappeared, and
said that the State wished to
submit to judgment in the sum of
14,174,693.12 Ghana cedis being
what was entered as default
judgment. My understanding of
my role as a judge is that I am
required to give judgment on the
evidence laid before me and not
as directed by the parties. I
have a duty to implement the
ethic of competence, which
requires adjudication based on
evaluation of evidence. Instead
of entering judgment as
submitted by the State, I have
chosen to examine the evidence
and give my judgment based on
the evidence.”
Apart from this assertion in the
judgment of the learned trial
judge, however, we have not
found any record in the Record
of Appeal of this attempt by the
State to submit to judgment.
Either the record is incomplete
or the learned trial judge
neglected to make a record of
that incident.
In our view, however, neither
this incident nor the imputation
of collusion alleged by the
appellant has a determinative
effect on the success of this
appeal. This is because they
make no difference to the
central analysis of the learned
trial judge, which was affirmed
by the Court of Appeal, namely
that Exhibits A and B did not
result in a contract because
there was no effective
acceptance of the offer made by
the plaintiff. Accordingly, the
following concluding plea of the
appellant in its Statement of
Case cannot succeed:
“In reality, my Lords, we wish
to submit that the finding of
collusion as well as the
derogatory remarks made about
Exhibit ‘B’ to the effect that
it is “fake and unauthentic” is
not borne out by the evidence on
record and it is respectfully
submitted thus that the judgment
based on these ought to be set
aside and this ground of appeal
allowed.”
Accordingly, all the grounds
argued by the appellant are
dismissed. However, before
concluding this judgment, we
need to advert to an issue that
was raised by the respondent in
his Statement of Case. Although
we have held above that the
alleged agreement between the
parties on interest calculation
was not a binding contract, the
respondent nevertheless claimed
that the purported agreement was
a loan agreement within the
purview of Article 181(3) of the
1992 Constitution and without
Parliamentary approval it was
invalid. Having held that the
purported agreement was not a
binding contract, there is no
need to deal with this
constitutional issue fully.
However, it is worth pointing
out that the extension of credit
facilities to a government
Ministry in relation to services
rendered to that Ministry is
not, in our view, equivalent to
a loan.
The appeal is dismissed and the
judgment of the Court of Appeal
affirmed.
(SGD) DR. S. K.
DATE- BAH
JUSTICE OF THE SUPREME COURT
(SGD) J.
ANSAH
JUSTICE OF THE SUPREME COURT
(SGD) J. V. M. DOTSE
JUSTICE OF THE SUPREME COURT
(SGD) P. BAFFOE
BONNIE
JUSTICE OF THE SUPREME COURT
(SGD) V. AKOTO-BAMFO
(MRS)
JUSTICE OF THE SUPREME COURT
COUNSEL;
ADDO ATUAH
FOR THE APELLANT.
PEARL
AKIWUMI SIRIBOUR ( PRINCIPAL
STATE ATTORNEY ) WITH MRS.
YVONNE AWOONOR-WILLIAMS
(ASSISTANT STATE ATTORNEY) FOR
THE RESPONDENT.
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