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Agreement –
Construction contract -
Abrogation of the agreement -
Right to ownership - Disputed
property.- Stay of Execution -
Whether the injunction would
render the Plaintiff’s appeal,
if successful, nugatory -
Whether there are exceptional
circumstances that warrant a
Stay of Execution - Whether the
failure to order an undertaking
does not, by itself, warrant a
Stay of Execution
HEADNOTES
The parties
entered an agreement , under
which: Plaintiff was to
construct a two-storey building
on Defendants’ land 25
storerooms on the ground floor,
25 storerooms on the first
floor,and residential apartment
on the second floor. Plaintiff
was to enjoy 2/3 of the building
for 30 years from the date of
completion of the ground and
first floors. Defendants were to
enjoy 1/3 of the building for 30
years, and the whole building
after 30 years from the date of
completion. Plaintiff was to
apply his own financial
resources, labor, materials and
equipment.Plaintiff was to
complete the ground and first
floors within 2 years and the
second floor within 1 year from
the completion of the ground and
first floors. Pursuant to the
agreement, Plaintiff demolished
an old structure on the premises
and partially constructed a
building, Plaintiff was however
unable to complete the building
within the period agreed,
leading to an abrogation of the
agreement by the Defendants .
Plaintiff brought an action
against the landowners to
recover costs of construction,
with interest, for the partially
completed two-storey building
Plaintiff continues to lease and
collect rental income from the
completed portions of the
building, and possesses the keys
to the storerooms. Its reasoning
was that the Plaintiff seeks a
purely financial remedy, thereby
admitting that Defendants have
the right to ownership of the
disputed property. The High
Court therefore concluded that
the Defendants must have the
right to control and manage the
property, the Court of Appeal
granted the Plaintiff a Stay of
Execution of the orders of the
High Court as it was of the view
that the status quo of the
parties must be maintained
pending the final determination
of the suit. It held that the
trial court should have exacted
an undertaking from the
Defendants, which is mandatory
under Rule 9, Order 25 of the
High Court Civil Procedure Rules
The
Defendants being dissatisfied
appealed on the sole ground that
the Court of Appeal’s grant of
Stay of Execution was a wrongful
exercise of judicial
discretion. appealed to the
Supreme Court
HELD
An injunction
prohibiting the Plaintiff from
further benefiting from the
property would not render his
appeal nugatory, where the
Plaintiff’s claim is purely
financial. The Plaintiff’s
ability to recover his costs is
unaffected, if not improved by
the injunction. As the High
Court stated, it is premature to
determine that Defendants would
not be capable of refunding the
Plaintiff’s financial
investments. Accordingly we hold
that the injunction granted by
the High Court would not render
the Plaintiff’s appeal nugatory.
The first and
second arguments, in our view,
do not amount to exceptional
circumstances as on facts the
Defendants contributed their
land for the project and the
Plaintiff was to bear the cost
of the project and is in any
event suing for the recovery of
his costs... The third appears
premature, as per the High
Court’s opinion. We therefore
find that the Plaintiff has not
demonstrated any exceptional
circumstances in his favor.
However in
the interest of justice due to
the economics of the
construction business, we will
order the High Court Kumasi, to
extract an undertaken from the
Defendants.
Subject to
the above order, the appeal is
allowed. The ruling of the Court
of Appeal, Kumasi, and dated 23
April 2013 is hereby reversed.
STATUTES
REFERRED TO IN JUDGMENT
High Court
Civil Procedure Rules (C.I. 47)
The Republic
v. High Court, Ex-parte
Ansah-Otu [2009] SCGLR 141.
Livingstone
Djokoto v. BBC Industrials
[2012] 36 MLRG 107,
NDK Financial
Ltd. v. Yiadom Construction and
Electrical Works Ltd. [2007/08]
SCGLR 93,
Mensah v.
Ghana Football Association and
Others [1998-90] 1 GLR 1-13
Joseph v.
Jebeile and Another (1963)
1 GLR 387-392 SC
The Republic
v. High Court, Ex-parte
Ansah-Otu, (2009) SCGLR
141,
CASES
REFERRED TO IN JUDGMENT
American
Cyanamid Co. v. Ethicon Ltd
[1975], All ER 504 HL
BOOKS
REFERRED TO IN JUDGMENT
DELIVERING
THE LEADING JUDGMENT
SOPHIA
ADINYIRA (MRS.) JSC
COUNSEL
PAAPAH DADSON
ESQ. WITH HIM MISS HILDA ADDO
FOR THE
DEFENDANTS/RESPONDENTS/APPELLANTS.
WILLIAM KUSI
ESQ. FOR THE
PLAINTIFF/APPELLANT/RESPONDENT.
___________________________________________________________________
JUDGMENT
________________________________________________________________
SOPHIA
ADINYIRA (MRS.) JSC (PRESIDING):
Facts
The parties
entered an agreement on 20
March, 2008, under which:
1.
Plaintiff was
to construct a two-storey
building on Defendants’ land on
No. Plot 25, Block 11, Asokwa
Residential Area, Kumasi,
containing:
a.
25
storerooms on the ground floor,
b.
25
storerooms on the first floor,
c.
A
residential apartment on the
second floor.
2.
Plaintiff was
to enjoy 2/3 of the building for
30 years from the date of
completion of the ground and
first floors. Defendants were to
enjoy 1/3 of the building for 30
years, and the whole building
after 30 years from the date of
completion.
3.
Plaintiff was
to apply his own financial
resources, labor, materials and
equipment.
4.
Plaintiff was
to complete the ground and first
floors within 2 years from March
20, 2008, and the second floor
within 1 year from the
completion of the ground and
first floors.
Pursuant to
the agreement, Plaintiff
demolished an old structure on
the premises and partially
constructed a building, at an
alleged cost of GHc400, 000 and
US$1,000. Plaintiff was however
unable to complete the building
within the period agreed,
leading to an abrogation of the
agreement by the Defendants in
May 2010. Plaintiff brought an
action against the landowners to
recover costs of construction,
with interest, for the partially
completed two-storey building
Plaintiff continues to lease and
collect rental income from the
completed portions of the
building, and possesses the keys
to the storerooms. Its reasoning
was that the Plaintiff seeks a
purely financial remedy, thereby
admitting that Defendants have
the right to ownership of the
disputed property.
The High
Court referred to dictum in
American Cyanamid Co. v. Ethicon
Ltd [1975], All ER 504 HL
that:
“If damages
in the measure recoverable at
common law would be adequate
remedy and the defendants would
be in a financial position to
pay them, no interlocutory
injunction would normally be
granted, however strong the
plaintiff’s claim appeared to be
at that stage.”
The High
Court therefore concluded that
the Defendants must have the
right to control and manage the
property, to derive maximum
financial income from the
property so as to be able to
satisfy Plaintiff’s demands at
the end of the trial. Further
the High Court was of the view
that it is premature at that
stage of the proceedings to
determine that Defendants are
incapable of refunding the
Plaintiff’s financial
investments.
On April 23,
2013, the Court of Appeal
granted the Plaintiff a Stay of
Execution of the orders of the
High Court as it was of the view
that the status quo of the
parties must be maintained
pending the final determination
of the suit. It held that the
trial court should have exacted
an undertaking from the
Defendants, which is mandatory
under Rule 9, Order 25 of the
High Court Civil Procedure Rules
(C.I. 47) as the circumstances
of this case, having arisen out
of an appeal, is distinguishable
from The Republic v. High Court,
Ex-parte Ansah-Otu [2009] SCGLR
141.
Appeal to the
Supreme Court
The
Defendants being dissatisfied
appealed on the sole ground that
the Court of Appeal’s grant of
Stay of Execution was a wrongful
exercise of judicial discretion.
Defendants/Appellants’
submissions
The
Defendants submits that the High
Court properly exercised its
discretion, and the Court of
Appeals should not have
substituted its own discretion
when reviewing the decision of
the High Court. The Plaintiff’s
appeal will not be rendered
nugatory as the Plaintiff admits
to having no property interest
and seeks only a reimbursement
of the cost of construction;
with interest up to the date of
reimbursement. They submit that
on the facts no exceptional
circumstances exist. Stay of
Execution will work untold
hardship on Defendants and their
families. While an undertaking
may be required, it is not
necessary. They urged the Court
to adopt a purposive
interpretation of Rule 9 Order
25 of C.I 47 as the rationale
behind the rule is to protect
the rights and prevent any
injury or damage to a party. In
this case, the Plaintiff has no
right to the property worthy of
protection. The Court of Appeals
erred in focusing on the
question whether the
interlocutory injunction was
properly awarded.
Plaintiff/Respondent’s
submissions
The Plaintiff
submits that the circumstances
warrant the grant of a Stay of
Execution as he has not yet
recovered the cost of
investment, and the Defendants
should not be allowed to benefit
from the project without making
any contribution. The Plaintiff
submits the Defendants and their
family members will be unable to
offer adequate financial
compensation, should the
Plaintiff be successful in the
suit. Plaintiff submits he has
contracted a loan from a bank to
construct the building, with
interest, and would be required
to raise money elsewhere to
offset the loan and he will
suffer greater hardship if the
order of the Court of Appeal is
reversed. The Plaintiff further
contends that the High Court has
failed to extract an undertaking
which is mandatory under Rule 9,
Order 25 of the High Court Civil
Procedure Rules (C.I. 47).
Consideration
Whether the
injunction would render the
Plaintiff’s appeal, if
successful, nugatory
Standard for
Stay of Execution
The principle
for considering an application
for a Stay of Execution is well
settled. As stated in
Livingstone Djokoto v. BBC
Industrials [2012] 36 MLRG 107,
NDK Financial Ltd. v. Yiadom
Construction and Electrical
Works Ltd. [2007/08] SCGLR 93,
and Mensah v. Ghana Football
Association and Others [1998-90]
1 GLR 1-13 and Joseph v. Jebeile
and Another (1963) 1 GLR
387-392 SC; the injunction must
be shown to make the applicant’s
appeal, if successful, nugatory.
In
Livingstone Djokoto v. BBC
Industrials Co. Ltd [2011] SCGLR
825 at 830, this Court held per
Anin Yeboah JSC that:
“In deciding
applications for stay of
execution, both trial court and
an appellate court must
carefully examine the judgment
appealed against and the order
or decree sought to be executed
to consider whether the appeal
would not be rendered
nugatory should the court
refuse it and the appellant wins
on appeal… Secondly, the court
must also consider the
exceptional circumstances,
which depend on the nature of
the case… This court may in
appropriate cases grant stay
where balance of hardship will
fall on the appellant.”
In NDK
Financial Services Ltd. v.
Yiadom Construction and
Electrical Works Ltd [2007/08]
SCGLR 93 in a majority decision
the Supreme Court held as by
head note 1
“The
principles for considering an
application for stay of
execution pending an appeal were
well-settled: the main principle
adopted by the courts is what
the position of the appellant
would be if the judgment were to
be enforced and the appeal is
successful…In effect the
essential point in considering
such applications was whether
the applicant would be returned
to the status quo ante should
the appeal succeed… Another
determining principle was which
of the parties would suffer
greater hardship should the
application be granted or
refused. On the facts of the
instant case, it was obvious
that the position of the
applicants would never be the
same if the security were to be
sold and they were to win the
appeal; that would render the
appeal nugatory. Furthermore the
respondents would lose nothing
other than the delay in having
their money while the appeal was
being pursued; that could not be
said to be greater hardship than
the position of the applicants
who would stand to lose their
property to a bona fide
purchaser if the stay were to be
refused and execution were to
take place.”
In Mensah v.
Ghana Football Association and
Others (1998-90) 1 GLR 1-13. SC,
this Court held:
“If the
enforcement would make the
appeal, if successful, nugatory
then the proper order to
make was one staying execution.”
Earlier in
the celebrated case of Joseph v.
Jebeile and Another (1963)
1 GLR 387-392 SC, this Court
held:
“[I]t is the
paramount duty of a court to
which an application for stay of
execution pending appeal is made
to see that the appeal, if
successful, is not rendered
nugatory”.
Stays were
granted in the above cases where
an injunction would cause an
irreparable loss, such as the
sale of property to a third
party (in the case of NDK
Financial v. Yiadom, supra)
and disrupt an ongoing national
football tournament (in the case
of Mensah v. Ghana Football
Association, supra).
Applying the above principle to
the facts of this case, an
injunction prohibiting the
Plaintiff from further
benefiting from the property
would not render his appeal
nugatory, where the Plaintiff’s
claim is purely financial. The
Plaintiff’s ability to recover
his costs is unaffected, if not
improved by the injunction. As
the High Court stated, it is
premature to determine that
Defendants would not be capable
of refunding the Plaintiff’s
financial investments.
Accordingly we hold that the
injunction granted by the High
Court would not render the
Plaintiff’s appeal nugatory.
Whether there
are exceptional circumstances
that warrant a Stay of Execution
Counsel for
Plaintiff asserts that there
were exceptional circumstances
to warrant a Stay of Execution.
In particular, it is argued
that: (1) the lack of recovery
of costs by the Plaintiff, (2)
the lack of contribution by the
Defendants, and (3) the low
likelihood of compensation by
the Defendants, constitute
exceptional circumstances. The
first and second arguments, in
our view, do not amount to
exceptional circumstances as on
facts the Defendants contributed
their land for the project and
the Plaintiff was to bear the
cost of the project and is in
any event suing for the recovery
of his costs... The third
appears premature, as per the
High Court’s opinion. We
therefore find that the
Plaintiff has not demonstrated
any exceptional circumstances in
his favor.
Whether the
failure to order an undertaking
does not, by itself, warrant a
Stay of Execution
While Rule 9
of Order 25 of the High Court
Procedure Rules, CI 47 requires
the High Court to order an
undertaking by the applicant in
the event that an application
for an interlocutory injunction
is opposed, a failure to comply
is a mere irregularity curable
under Order 81, rr 1 and 2 and
so does not nullify the grant of
an injunction. In The Republic
v. High Court, Ex-parte
Ansah-Otu, (2009) SCGLR
141, an application for
certiorari was denied by the
Supreme Court; in holding that a
failure to order an undertaken
though a mandatory requirement
under the said rule, was an
error of law and was apparent on
the face of the record, the
error did not go to the
jurisdiction of the court in the
sense that it did not emanate
from a wrong assumption of
jurisdiction or in violation of
a constitutional provision nor
was it a nullity by any
standard. The Supreme Court
held:
“[T]he
circumstances of the case must
be looked at in considering the
grant or refusal of the
application for Interlocutory
injunction… Even though rule
9(1) and (2) of Order 25
requires an applicant to give an
undertaking, it is procedural
and should not be interpreted to
limit the jurisdiction imposed
on the courts… It is therefore
not the case that in all
interlocutory injunction
applications before the courts,
where rule 9(1) and (2) of Order
25 is applicable, the refusal or
failure of the court to make an
order for undertaking should
nullify the grant of
interlocutory injunction.”
However in
the interest of justice due to
the economics of the
construction business, we will
order the High Court Kumasi, to
extract an undertaken from the
Defendants.
Subject to
the above order, the appeal is
allowed.
The ruling of
the Court of Appeal, Kumasi, and
dated 23 April, 2013 is hereby
reversed.
(SGD) S. O. A.
ADINYIRA(MRS)
JUSTICE OF THE SUPREME
COURT
(SGD)
ANIN YEBOAH
JUSTICE OF THE SUPREME
COURT
(SGD) P. BAFFOE
BONNIE
JUSTICE OF THE SUPREME COURT
(SGD)
V. AKOTO BAMFO (MRS)
JUSTICE OF THE SUPREME
COURT
(SGD) J. B.
AKAMBA
JUSTICE OF THE SUPREME
COURT
COUNSEL
PAAPAH DADSON
ESQ. WITH HIM MISS HILDA ADDO
FOR THE
DEFENDANTS/RESPONDENTS/APPELLANTS.
WILLIAM KUSI
ESQ. FOR THE
PLAINTIFF/APPELLANT/RESPONDENT.
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