Limitation of actions – Trust –
Breach – Action to recover
shares and dividends held in
trust – Six years limitation
period commencing from wrongful
retention of shares and
dividends – Limitation Decree
1972 (NRCD 54) s 15(1).
Practice and procedure –
Statutes
-
Application – Whether court
entitled to apply statute not
cited in argument.
Practice and procedure – Claim –
Cause of action – Whether
plaintiff may sue to recover
shares and dividends held in
trust.
The plaintiff claimed that he
incorporated Vacuum Salt
Products Limited and in 1975
allotted 100,000 shares to the
defendant to be held in trust
for the plaintiff. Dividends
were declared in 1981 and 1983
and paid in 1991 but the
defendant refused to pay over
those dividends to the
plaintiff. The plaintiff
therefore revoked the trust and
instituted an action in
September 1992 in the High Court
for a declaration that the
shares were held in trust, an
order for transfer of the shares
to him and account of all
dividends so far received by the
defendant. The defendant applied
under Or 12 r 24 of the High
Court (Civil Procedure) Rules
1954 (LN 140A) to set aside the
writ on the ground that the
action was statute-barred under
section 15(1) of the Limitation
Decree 1972 (NRCD 54), also that
the writ disclosed no cause of
action. The trial judge
dismissed the motion and the
defendant appealed to the Court
of Appeal. At the hearing of the
appeal counsel for the defendant
argued that the cause of action
arose in 1975. Secondly counsel
complained that the parties
argued their respective cases
under section 15(1) of the
Limitation Decree 1972 (NRCD 54)
but the trial judge suo motu
invoked section 15(4) in
determining the objection.
Held:
(1) the contention that the
cause of action accrued in 1975
was misconceived. The trust was
created in 1975 but dividends
were not declared until 1981.
Since the shares were held in
trust the defendant had the
legal title only to the
dividends and their continued
retention amounted to conversion
under section 15(4), not section
15(1) of NRCD 54. The action was
therefore not caught by
limitation.
(2) Section 15(4) of NRCD 54 was
rightly invoked and applied by
the trial judge because the
facts logically led to its
invocation and application. It
would be wrong for a trial judge
to ignore an applicable statute
because none of the parties
relied upon it. Ababio v
Republic [1966] GLR 422, SC,
Dam v Addo [1962] 2 GLR
200, SC, Bisi v Tabiri
[1984-86] 1 GLR 282, CA referred
to.
(3) The contention that the writ
disclosed no cause of action was
unmeritorious, more so when the
appellant did not deny the
existence of the trust. The
action for the declaration put
an end to the trust and the
claims to recover the money and
account became actionable.
Cases referred to:
Ababio v Republic
[1966] GLR 422, SC.
Bisi v Tabiri
[1984-86] 1 GLR 282, CA.
Dam v Addo
[1962] 2 GLR 200, SC.
E D Kom
for the appellant.
Kojo Afram Asiedu
for Ofosu Ammah for the
respondent.
APPEAL against the judgment of
the High Court to the Court of
Appeal.
BROBBEY JA.
The plaintiff averred that he
set up a company by name Vacuum
Salt Products Limited. Following
some discussion with the
defendant, the plaintiff
allotted one hundred thousand
shares in that company to the
defendant on the express
understanding that the defendant
would hold the shares in trust
for the plaintiff. That was in
1975. The plaintiff stated
further in his affidavit filed
on 12 November 1992 that when
dividends were declared in 1981
he authorised the defendant to
hold the amount in trust for
him, the plaintiff. The
defendant refused later to pay
the 1981 dividends to plaintiff.
The plaintiff therefore stopped
payment of the 1983 dividends to
the defendant. Consequent upon
certain Government actions taken
in connection with the company
in 1989, the plaintiff stopped
further attempts to pay
dividends to defendant. He also
attempted to end the trust by a
letter dated 28 April 1992. When
the dividends were not refunded
to the plaintiff, he instituted
action against the defendant
claiming three reliefs, namely:
(1) A declaration that the
appellant held 100,000 shares of
the company in trust for him;
(2) An order for the defendant
to transfer the shares to him;
(3) Accounts of all dividends
and profits arising from the
shares.
Before the action could proceed
to a hearing, the defendant’s
counsel filed a motion under Or
12 r 24 of the High Court (Civil
Procedure Rules) 1954 LN 140A to
set aside the writ of summons on
the sole ground that the action
was statute-barred. While
arguing the motion in the High
Court, counsel for the defendant
contended further that the writ
disclosed no cause of action.
The trial judge dismissed the
motion. It was against that
dismissal that the defendant
appealed to this court. In this
court also, counsel for the
appellant argued the two points
he canvassed before the trial
court on want of cause of action
and the statutory limitation on
the plaintiff's action.
Throughout the pleadings and the
proceedings before the High
Court and this court, the
appellant never denied that the
plaintiff created a trust with
him as the settlor and sole
beneficiary and the respondent
as the trustee. Mr Kom who
appeared for the appellant
argued that 1975 was when the
cause of action arose. That
could not be correct; 1975 was
the year when the trust was
created. Dividends were not
declared until 1981. The bone of
contention however revolves
around the person who should be
paid the dividends.
The respondent alleged that he
had agreed with the appellant
for the latter to keep the
dividends as additional
allowance in his capacity as
chairman of that company. That
also has not been denied by the
appellant. Apparently, that was
the state of affairs until
dividends were actually paid to
appellant in 1991 as evidenced
by a letter marked exhibit D1.
To my mind that seems to explain
why the respondent did nothing
about the dividends with
appellant but revived the issue
on the payment of dividends in
1991 when the appellant was
actually paid the dividends and
he declined to pay same to the
respondent.
Since the appellant conceded
that a trust was created, making
him only a trustee, he knew that
he only had legal title to the
dividends and the respondent, as
the sole beneficiary and holder
of equitable interest, was
entitled to be paid the moneys.
The continued retention of the
dividends by the appellant
clearly amounted to conversion
of those dividends.
Counsel for the appellant based
his arguments substantially on
the provisions of the Limitation
Decree 1972 NRCD 54 under which
he submitted that the
respondent's action was statute
barred since the dividends were
declared in 1981 and 1983.
Section 15(1) of NRCD 54 limits
an action to recover trust money
to six years. It provides that:
“15(1) Subject to subsection (4)
of this section, an action to
recover money or other property
or in respect of any breach of
trust, not being an action for
which a period of limitation is
fixed by any other provision of
this Decree, shall not be
brought against a trustee or any
person claiming through him
after the expiration of six
years from the date on which the
right of action accrued.”
The issue raised by the
respondent’s writ concerned
payment of the dividends, not a
mere declaration of them.
Dividends were declared in 1981
and 1983 but were not paid until
1991. The writ was filed in
September 1992. It could not
therefore be caught by the
six-year statute bar.
In my view the most contentious
issue relates to section 15 of
NRCD 54. Counsel for the
appellant contented that the
parties based their respective
cases on section 15(1) of NRCD
54. The trial judge however
invoked section 15(4), applied
it and, wrongly in his view,
dismissed the appellant’s
objection to the suit. Relying
on the case of Dam v Addo
[1962] 2 GLR 200 counsel for the
appellant submitted that, in so
far that the trial judge invoked
section 15(4) which was not the
basis of the case of either
party, the judge erred and so
his order on the preliminary
objection should be set aside.
It will be observed that section
15(1) is made expressly subject
to the provisions of section
15(4). Section 15(4) of NRCD 54
also provides that:
“No period of limitation fixed
by this Decree shall apply to an
action against a trustee or any
person claiming through him
where-
(a) the claim is founded on any
fraud or fraudulent breach of
trust to which the trustee was
party or privy, or
(b) the claim is to recover
trust property or the proceeds
thereof still retained by the
trustee and converted to his own
use.”
Reading the two subsections
together it is apparent that the
provisions of section 15(1) will
be inapplicable whenever the
requirements in section 15(4)
are satisfied.
The ruling of the trial judge
was based on the retention of
dividends held on trust, which
dividends had been converted by
the appellant to his own use
instead of paying same to the
respondent. That was the case of
the respondent as appearing in
paragraphs 5, 6, 9 and 14 of
respondent's affidavit in
opposition filed on 12 November
1992. In fact, it appears that
the appellant did not controvert
the fact that that was the
respondent’s case. The
memorandum to the Decree
explained the section inter
alia, thus:
“No period of limitation fixed
by the Decree will apply to an
action against a trustee of any
person claiming through him when
the claim is founded on any
fraud or fraudulent breach of
trust to which the trustee was a
party or privy or is to recover
trust property or proceeds
thereof still retained by the
trustee and converted to his own
use.”
My view is that even if neither
of the parties based his case or
argument on section 15(4), that
subsection was rightly invoked
and applied by the trial judge.
There are two reasons for this
view. The first is that the
facts of the case logically led
to the invocation and
application of section 15(4)
because of the issue of
conversion of the dividends
being proceeds from the trust.
The second is that even if the
parties based their case and
arguments on section 15(1), that
subsection was expressly made
subject to section 15(4). That
means that, between the two
subsections, section 15(4)
prevails over section 15(1).
Having regard to the clear
wording of section 15 (1), the
trial judge acted properly by
applying section 15(4) to which
section 15(1) was made subject.
An important issue raised in the
appeal is whether or not a trial
judge is entitled to invoke and
apply the law even if none of
the parties before him invokes
or relies on that law. In this
country, the principle of stare
decisis mandates lower courts to
follow decisions of higher
courts. If a higher court’s
decision binding on a trial
judge is known to the judge but
none of the parties before him
nor any of the lawyers relies on
that decision, the trial judge
will have to apply the mandatory
decision unless he can
distinguish it from the case
before him. Similarly, where a
statute of the land is known to
a trial judge but none of the
parties applies it, it will be
wrong for the trial judge to
ignore that statute where the
facts of the case before him
warrant the application of that
statute. However correct the
conclusions of the trial judge
may be, to ignore such binding
decided case or statute may
render the court's decision
faulty on the grounds of being
per incuriam. One case which
illustrates this point is
Ababio v Republic [1966] GLR
422, SC in which it was held
that a trial court is entitled
to examine the law to satisfy
itself as to a particular law
applicable to the facts before
it. The Supreme Court added in
that case at page 432 that:
“Without attempting to lay down
any absolute rule on this
matter, we think that by a
prudent exercise of common
sense, judges should be willing
to waive proof by oral evidence
of fundamental matters where
such are manifestly unnecessary,
as for instance, on points of
law on which easy reference
could be made in relevant law
books. Where the judge feels he
is entitled or qualified to look
through the enactments or
ordinances or statutes or law
reports as they are not in
evidence before him, and would
not know which of the ordinances
or statutes were still in force
at the time of trial, he should
be allowed to do so.”
The principle was admittedly
enunciated in a criminal case,
but I think it is equally
applicable to civil cases like
the instant one. One would have
thought that this principle is
quite basic, but the fact that
the Supreme Court had occasion
to elaborate on it in a decided
case underlines its significance
in the decision-making process.
Counsel for the appellant relied
heavily on Dam v Addo
[1962] 2 GLR 200, SC at 203.
That case decided that a court
must not substitute for a party
a case contrary to and
inconsistent with that which the
party himself has put forward in
his pleadings and evidence. On
the basis of that authority
counsel submitted that the trial
judge erred by applying section
15(4) of NRCD 54 because neither
the appellant nor the respondent
based his case on s 15(4).
This court had occasion to
consider the connotations of
that principle in the case of
Bisi v Tabiri [1984-86] 1
GLR 282 which were summarized as
follows:
“(4) The principle enunciated in
Dam v Addo [1962] GLR 200
at 203, SC to the effect that a
court must not substitute for a
party a case contrary to, and
inconsistent with, that which
the party himself had put
forward by his pleadings and
evidence was clear and
unexceptionable. The general
principles guiding the
application of that principle
deducible from the cases were
that: (a) the new case
was not pleaded either expressly
or by necessary implication; (b)
the new case was raised
after obvious difficulties with,
or failure of the old case, the
party clearly turning a complete
somersault; (c) sufficient
notice of the new case was not
given, it was not contested. It
was raised either at the address
stage or on appeal or by the
court itself; (d) the new
case was irrelevant to the
resolution of the issues on
hand; and (e) the new case
was not just a matter of
interpreting and giving effect
to a document relevant to the
issue, and properly tendered in
evidence. However, the court's
duties to make findings of fact,
and then decide the legal
consequences flowing therefrom
must be distinguished form cases
coming properly within Dam v
Addo and must not be
confused with them.”
To these I would add that the
principle in Dam v Addo
would be inapplicable where the
new case is based on the
invocation and application of a
pure point of law taken from a
statute or binding decided case.
Unless this were so, it would
stultify the basic principle
enunciated in Ababio v
Republic supra that a trial
judge is entitled to look for
and apply the law if he is
qualified and competent to do
so. What is deducible from
Bisi v Tabiri and Ababio
v Republic and the instant
case is that it is not every
case where a trial judge
determines a case on points not
raised by neither party which
will warrant the application of
the principles in Dam v Addo
to fault the determination.
There are exceptions to the
principle in that case: One such
exception was made in Bisi v
Tabiri where on a submission
that a case had been substituted
for a party inconsistent with
the case put forward in his
statement of claim, it was held
that:
“The remedy sought by the
plaintiff was a declaration that
the building was family property
and not the private property of
the testator. And given the
specific findings of fact made
by the trial judge to the effect
that the plaintiff had nothing
to do with procuring the land;
that he was not the sole
supplier of money and materials,
but that he contributed
substantially in these, the
court was entitled to draw the
necessary inference of law that
the house was family property.
The facts in the case could not
therefore by any stretch of
argument square with genuine
cases of substitution and the
principles deducible from them.
Tawiah-Yesereh v CFAO
[1966] GLR 357, SC Appiah v
Akers Trading Co [1972] 1
GLR 28 at 33-34; Board of
Directors of Orthodox Secondary
School of Peki v Tawlma-Abels
[1974] 1 GLR 419, CA, Benneh
v The Republic [1974] 2 GLR
47, CA, Atta v Amoasi
[]1976] 2 GLR 201, CA,
University of Cape Coast v
Anthony [1977] 2 GLR 21, CA
and Allotey v Quarcoo,
Court of Appeal, 21 January
1981, digested in [1981] GLRD 14
examined.”
In the instant case, the trial
judge was of the view that the
respondent was “claiming back
what he alleges to be monies and
shares which the defendant holds
in trust for him and which he
had converted to his own use”.
That “conversion” was clearly
covered by section 15(4) but not
section 15(1). The trial judge
was therefore right in applying
section 15(4) to resolve the
issue before him even if none of
the parties relied on it and in
ruling in favour of the
plaintiff on the issue of
statute bar because section
15(4) rendered inapplicable the
six-year period of limitation
where trust money has been
converted.
The second ground of appeal that
the writ disclosed no cause of
action is unmeritorious. I have
already stated that the
existence of the trust is not
denied by the appellant. Indeed
when in 1992 the respondent
wrote exhibit P1 to terminate
the trust the appellant’s reply
per his counsel in exhibit P2
merely advised the respondent to
comply with the Companies Code
1963 (Act 179). The record shows
that when counsel for the
appellant replied to the
arguments of the respondent’s
counsel, appellant’s counsel
conceded that a beneficiary can
put an end to a trust. The
plaintiff's first relief was for
a declaration putting an end to
the trust. Such a declaratory
action cannot be said to be
unknown to the law to support a
proposition that it discloses no
cause of action.
Secondly the appellant was the
one who filed exhibit D1 which
shows that he was paid dividends
in 1991. So long as he conceded
that he was a mere trustee
holding shares and the
respondent was the beneficiary
and settlor of the trust with
equitable interest, a suit
claiming the money which the
respondent alleged was properly
due to him created a cause of
action.
The third relief was for a
declaratory order for accounts.
It is undisputed that some
moneys which the respondent
alleged he should be paid went
to the appellant. If the holder
of equitable interest in those
moneys applied for a court order
to know how much the moneys was
held in trust I seriously cannot
see how it can be argued that
such an application disclosed no
cause if action.
In my view, the appeal is
without substance or merit and
should be dismissed.
ESSIEM JA.
I agree
ADJABENG JA.
I also agree.
Appeal dismissed.
S Kwami Tetteh, Legal
Practitioner |