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Criminal law – Fraud –
Damages for deceit - Company
law - Loan agreement - Non-Bank
Financial Institution - Recovery
of monies – Binding and
enforceable agreement -
Vicarious liability - Whether
or not companies may be held
liable for the fraudulent acts
of their officers - Whether or
not the said officer was
expressly or impliedly
authorised to act in the matter
of the discounting transaction
- section 25 of Borrowers
and Lenders Act, 2008 (Act 773)
HEADNOTES
This appeal presents for our
consideration the circumstances
under which a limited liability
company may be held liable on
account of the fraudulent acts
of its official. From the facts
of the case, it is beyond doubt
that John Oseku Ankrah, who at
all material times was the
Finance Manager of the 3rd
defendant/respondent/respondent
(the 3rd defendant),
in his engagements with the
plaintiff/appellant/appellant
(the plaintiff), was acting a
role in a choreographed
performance put up to deceive
and defraud unsuspecting third
parties. The performance
involved a number of
conspirators and they succeeded
in collecting an amount of about
GHS6,539,612.00 from the
plaintiff, a non-Bank Financial
Institution, as loans that have
not been repaid. As is usual
with this type of cases, the
prospects of recovering the
money from the fraudsters are
dim so the court has been called
upon to decide, between the
plaintiff and the 3rd
defendant, a big multinational
telecommunications company, who
ought to bear the loss. On 13th
March, 2014 the plaintiff sued
the three defendants herein in
the Commercial Division of the
High Court, Accra
for
recovery of the monies
loaned out with the agreed
interest. Liability was easily
established against the 1st
and 2nd defendants
and the High Court gave judgment
dated 18th July, 2016
for the plaintiff against them.
However, the court held that the
3rd defendant was not
jointly or severally liable to
the plaintiff The Court of
Appeal in its unanimous
dismissed the appeal as without
merit Still dissatisfied, the
plaintiff has filed this appeal,
HELD
Under these circumstances, we
are of the opinion that in his
engagements with the plaintiff,
John Oseku Ankrah acted on a
frolic of his own for purposes
of the businesses of the 2nd
defendant and the plaintiff. He
was not engaged in work that he
was employed to do for the 3rd
defendant so he was not acting
within the scope of his
employment and the 3rd
defendant cannot be held
vicariously liable.
It is for the
reasons explained above that the
appeal fails and same is
accordingly dismissed.
STATUTES REFERRED TO IN JUDGMENT
Borrowers and Lenders Act, 2008
(Act 773)
Companies Act, 1963 (Act 179)
Contracts Act 1960, (Act 25)
CASES REFERRED TO IN JUDGMENT
English v Emery Reimhold & Stick
Ltd [2002] 1 WLR 2409
Gorman v Rep [2003-2004] SCGLR
784
Pasely v Freemen (1789) 3 Term
Reps 51
Derry v Peek (1889) 14 App Cas
337
Royal British Bank v Turquand
(1856) 6 E and B 327
Mahony v East Holiford Mining Co
(1874-75) LR 7, HL 879
Godka Group of Companies v P.S.
Global [2001-2002] SCGLR 918
Reuben vrs Great Fingal
Consolidated [1906] 1 AC 439
(HL)
Armagas Ltd vrs Mundogas SA
[1986] 2 ALL ER 385 (HL)
Agogro v Ago [1973] 1GLR 43
Osei v State Farms Corp & Anor
[1964] 1 GLR 649
Guardian Royal Exchange
Assurance v Appiah [1984-86] 1
GLR 52, CA.
Attorney-General & Anor v Dadey
[1971] 1 GLR 228
Hilton v. Thomas Burton (Rhodes)
Ltd. [1961] 1 All E.R. 74
Century Insurance Co., Ltd. V.
Northern Ireland Road Transport
Board ([1942] 1 All E.R. 491;
[1942] A.C. 509)
Lloyd v. Grace, Smith & Co.
([1912] A.C. 716),
Canadian Pacific Ry. Co. v.
Lockhart ([1942] 2 All E.R. 464;
[1942] A.C. 591)
Crook v. Derbyshire Stone, Ltd.
([1956] 2 All E.R. 447
Higbid v. R. C. Hamnett, Ltd.
((1932) 49 T.L.R. 104).
WM Morrison Supermarkets plc v
Various Claimants [2020] UKSC 12
Morris v C W Martin & Sons Ltd
[1966] 1 QB 716, 737
Lister [2002] 1 AC 215
Kooragang Investments Pty Ltd v
Richardson & Wrench Ltd [1982]
AC 462
BOOKS REFERRED TO IN JUDGMENT
DELIVERING THE LEADING JUDGMENT
PWAMANG JSC:-
COUNSEL
SAMUEL M. CODJOE ESQ FOR THE
PLAINTIFF/APPELLANT/APPELLANT.
PETER ZWENNES FOR THE 3RD
DEFENDANT/RESPONDENT/RESPONDENT
PWAMANG JSC:-
My Lords,
this appeal presents for our
consideration the circumstances
under which a limited liability
company may be held liable on
account of the fraudulent acts
of its official. From the facts
of the case, it is beyond doubt
that John Oseku Ankrah, who at
all material times was the
Finance Manager of the 3rd
defendant/respondent/respondent
(the 3rd defendant),
in his engagements with the
plaintiff/appellant/appellant
(the plaintiff), was acting a
role in a choreographed
performance put up to deceive
and defraud unsuspecting third
parties. The performance
involved a number of
conspirators and they succeeded
in collecting an amount of about
GHS6,539,612.00 from the
plaintiff, a non Bank Financial
Institution, as loans that have
not been repaid. As is usual
with this type of cases, the
prospects of recovering the
money from the fraudsters are
dim so the court has been called
upon to decide, between the
plaintiff and the 3rd
defendant, a big multinational
telecommunications company, who
ought to bear the loss.
THE FACTS
The scheme designed by the gang
was this. Sometime about 10th
May, 2012 the 1st defendant
approached the plaintiff and
presented to it some Local
Purchase Orders, VAT Invoices
and Waybills which showed that
his company, the 2nd
defendant, supplied
telecommunication equipment to
the 3rd defendant and
was waiting payment.
He told them he wanted to
discount the invoices, an
undertaking the plaintiff is
into as part of its business.
Supporting the documents was a
letter on the letterhead of the
3rd defendant signed
by John Oseku Ankrah, Finance
Manager, confirming the order
and stating that the items had
indeed been received. The letter
further stated, that as
requested by the 2nd
defendant, payment for the order
would be effected to the joint
names of the plaintiff and 2nd
defendant. On receipt of the
documents the plaintiff decided
to verify their authenticity.
Some officials went to the
offices of the 3rd
defendant in Accra and held a
meeting with the Finance Manager
in his office and he affirmed
the transaction between the 2nd
and 3rd defendants
and the letter he signed. After
that affirmation the plaintiff
requested the 2nd
defendant to formally apply for
a loan. The 2nd
defendant duly applied attaching
all the documents and a loan for
an amount of GHS2,317,112.00 was
quickly processed and approved
to be repaid within 180 days at
monthly compound interest of
4.7%. The 1st
defendant signed as the
guarantor of the
loan.
However, before disbursement,
the plaintiff wrote another
letter addressed to the Finance
Manager of the 3rd
defendant stating that; “We have
received a request from LGG (2nd
defendant) to discount their
payment on Purchase
Orders…….totaling
GHS3,310,160.00….All payments in
connection with the contract
must be transferred directly to
our Fidelity Bank Account Number
1070000434348, Ridge Towers
Branch. Please confirm
acceptance of our proposal by
appending your signature in the
space provided below.” The
letter provided spaces for Name,
Signature, Position, Date and
Stamp. The letter was
countersigned as requested by
John Oseku Ankrah, Finance
Manager and dated 16/05/2012 but
no stamp was affixed. When the
countersigned letter was
received by the plaintiff, it
executed the first
loan
agreement of GHS2,317,112.00
the same day, 16/05/2012 and the
1st and 2nd
defendants were paid.
There was a second loan for
GHS3,622,500.00 which followed
the same modus involving
invoices and waybills confirmed
by the Finance Manager and a
letter accepting to pay money
due to 2nd defendant
directly to the plaintiff. Then
there was a third for
GHS600,000.00 but by then the
amount expected from the 3rd
defendant was sufficient to
cover that amount as well so no
documents were taken for it.
Before requesting for the third
loan, the 2nd
defendant paid the plaintiff
GHS1,000,000.00 to offset an
earlier loan it contracted
before the series of loans
subject matter of this
litigation. This apparently gave
the plaintiff the confidence
that these loans would be
repaid.
Sadly, no payment was received
from the 3rd
defendant by end of the expected
period and apart from a meager
sum of GHS429,965.00, the 2nd
defendant defaulted in payment
of the three loans. When the
plaintiff enquired from 1st
defendant why the 3rd
defendant did not effect payment
as agreed by John Oseku Ankrah,
he claimed they were paid
directly by 3rd
defendant. The natural immediate
reaction was for the plaintiff
to smell a rat so it decided to
re-verify the representations
upon which it advanced the
loans. This time, the plaintiff
wrote to the Managing Director
of the 3rd defendant
by letter dated 4th
February, 2013 stating; “Kindly
confirm if Huawei Tech. (Gh). S.
A. Ltd owes an amount of….to LGG
Company Limited as at 4th
February, 2013.” The letter made
reference to the Purchase Orders
and Waybills that it had been
presented with and attached
copies to the letter. The letter
also stated the paltry amounts
it had received thus far. The 3rd
defendant replied the letter and
said it had no such transaction
with the 2nd
defendant and did not owe it any
money. On further investigations
by the plaintiff it turned out
that the whole thing was a fraud
and that the said Finance
Manager of 3rd
defendant and the 1st
defendant had previously engaged
in a similar fraud involving
another discounting company, SDC
Finance and Leasing Co. Ltd of
Accra.
THE EARLIER PROCEEDINGS
On 13th March, 2014
the plaintiff sued the three
defendants herein in the
Commercial Division of the High
Court, Accra for recovery of the
monies loaned out with the
agreed interest. Liability was
easily established against the 1st
and 2nd defendants
and the High Court gave judgment
dated 18th July, 2016
for the plaintiff against them.
However, the court held that the
3rd defendant was not
jointly or severally liable to
the plaintiff.
The main reason the High Court
judge assigned for not holding
the 3rd defendant
liable was his view that the
Borrowers and Lenders Act, 2008
(Act 773) was applicable
in the case on the facts as
narrated above. He held that
the invoices and letters
written by John Oseku Ankrah
that the plaintiff based its
case on are “receivables”, but
the plaintiff failed to register
them as required by
section
25 of Act 773, so they were
not enforceable against 3rd
defendant. The issue of the
applicability of Act 773 on the
facts of the case was raised
suo muto by the trial judge
at the application for
directions and finally his
judgment turned on that statute.
Meanwhile, the parties argued
their respective cases before
him largely on of provisions of
the
Companies Act, 1963 (Act 179)
including the provision
that states that
companies
may be held liable for the
fraudulent acts of their
officers. This Act has since
been replaced by the
Companies Act, 2009 (Act 992).
The trial judge was of the
opinion that the issue of
whether the 3rd
defendant was bound by the
fraudulent acts of its Finance
Officer was irrelevant. He
nevertheless expressed an obiter
opinion and took the view, that
because the Finance Manager
acted fraudulently, sections
137(1), 142 and 143 of the Act
were inapplicable in this case.
He said in any event, if the
plaintiff had been diligent in
verifying the authenticity of
the documents it would have
uncovered the fraud and not
advanced any money to the 1st
and 2nd defendants.
The plaintiff appealed against
the part of the judgment of the
High Court that said the 3rd
defendant was not jointly or
severally liable to pay the
monies it claimed. In the
written submissions of the
plaintiff in the Court of
Appeal, Mr Samuel Cudjoe Esq,
learned counsel for the
plaintiff, argued, with
considerable force, that the
High Court judge misunderstood
the case it made against the 3rd
defendant and that as between
the plaintiff and the 3rd
defendant, there was no credit
transaction so by the very
provisions of Act 773, which he
quoted it was not applicable as
far as its claim against the 3rd
defendant was concerned. He also
argued the point before the
Court of Appeal that
notwithstanding any fraudulent
conduct on the part of the
Finance Manager, the 3rd
defendant was vicariously liable
under the provisions of Act 179
since the acts were by its
Finance Manager, a highly placed
officer of the company.
The Court of Appeal in its
unanimous judgment dated 29th
May, 2018, without
expressing themselves on the
weighty legal submissions made
by Counsel for the plaintiff
pointing out fundamental
misconceptions in the judgment
appealed from, delivered
themselves as follows;
“On perusing the appeal records
the conclusion I came to is that
all these grounds of appeal can
be disposed of on determination
of the issue whether Mr. Oseku
is a staff whose acts on
consideration of any or the
combination of sections 137 to
143 of the Companies Code can
make the 3rd defendant liable
for his association with this
fraud and by that make the 3rd
defendant jointly liable with
the 1st and 2nd defendant.
Which provisions of the
Companies’ code are immediately
relevant to this issue of the
3rd defendant’s liability for
the acts of Oseku? On a closer
reading of these provisions I
singled out two sections and
which same sections I (sic) am
of the view will also dispose of
this appeal: sections 143 and
140. Sections 143 provides for
situations where officers and
agents are involved in fraud and
Section 140 deals specifically
with acts of officers and
agents. 143 provides:
143. “Where, in accordance
with Sections 139 to 142 of this
Code, a company would be liable
for the acts of any officer or
agent the company shall be
liable notwithstanding that the
officer or agent has acted
fraudulently or forged document
purporting to be sealed by, or
signed on behalf of, the
company”.
We are here dealing with an
undisputed fraudulent
transaction by Mr. Oseku the
Country Financial Director of
the 3rd defendant company. This
section provides that the
company would be liable for his
fraudulent acts provided the
company would be liable for this
acts in accordance to sections
139 to 142. So we revert to
these sections for the answer
whether Mr. Oseku falls within
persons and whose acts the
company should be liable for. In
the factual circumstances of
this case Section 140, to me
provides the answer. It states
1. Except as provided in
section 139 of this code, the
acts of an officer or agent of a
company shall not be deemed to
be acts of the company unless
a. The company, acting
through its members in general
meeting, boards of directors, or
managing director shall have
expressly or impliedly
authorized such officer or agent
to act in the matter or
b. The company, acting
under paragraph (a) has
represented the officer or agent
as having its authority to act
in the matter, in which event
the company shall be civilly
liable to a person who has
entered into the transaction in
reliance on that representation,
unless that person had actual
knowledge that the officer or
agent did not have authority or
unless, having regard to the
position with, or relationship
to, the company, that person
ought to have known of the
absence of authority.” (emphasis
supplied).
On application of this section
to the evidence on record there
is no evidence Mr. Oseku
was
expressly or impliedly
authorised to act in the matter
of the discounting transaction.
The evidence in this case is
undisputed that all
correspondences on the
transaction was handled by Mr.
Oseku without the involvement or
knowledge of anybody in the 3rd
defendant company.
It is my conclusion therefore
that the 3rd defendant cannot be
held liable jointly with the 1st
and 2nd defendants.
I consequently
dismiss
the appeal as without merit.”
Still dissatisfied, the
plaintiff has filed this appeal.
An examination of the grounds of
appeal and a careful reading of
the arguments and submissions
contained in the plaintiff’s
statement of case show that the
point of disagreement the
plaintiff has with the Court of
Appeal is that the court did not
properly construe and apply all
the relevant provisions of Act
179 in coming to their decision.
In the view of the plaintiff, if
they had done that they would
have upheld its claim against
the 3rd defendant.
Before a consideration of the
main arguments of the plaintiff,
we wish to clarify the matter
about the nature of the cause of
action the plaintiff has against
the 3rd defendant
upon the facts in this case. In
the Court of Appeal the
plaintiff addressed this when it
argued that the trial judge
misunderstood their case against
the 3rd defendant and
in this final appeal it has made
further submissions on it and
even indicted the Court of
Appeal of not demonstrating a
correct appreciation of its
case. In our opinion, learned
counsel for the plaintiff, who
represented it throughout, makes
a valid point when he says that
the trial judge misapprehended
the case the plaintiff made
against the 3rd
defendant and that it disabled
the judge from making competent
and correct analysis of the case
on the law applicable. As
stated above, the Court of
Appeal in their judgment did not
address this aspect of the case
but, with due respect, we think
that, being a court of
correction, where arguments in
an appeal touch and affect the
foundation of a case, as was
made by Counsel for the
plaintiff in this case, they
should be addressed in order
that any judgment delivered will
be grounded on sound reasoning
so that the party that would
lose would feel she has been
accorded a fair hearing. We are
not unaware of the principle
that the duty of a judge to give
reasons for her judgment does
not necessarily require that
every issue that arises in a
case must be determined and
every argument answered and that
it is sufficient if what the
judge says shows the parties the
basis on which she decided the
case. But the authorities say
that the application of that
general principle differs from
case to case. See
English v Emery Reimhold & Stick
Ltd [2002] 1 WLR 2409.
Where an issue or argument
touches on the very foundation
of a case, a court that avoids
that issue risks coming to a
distorted judgment and the
reasons for its decision being
unsatisfactory. Courts,
especially superior courts of
record, must always strive not
only to come to the correct
conclusion on cases but to
arrive at those conclusions on
the basis of sound legal
reasoning. This is crucial for
the common law system we
practice because of the doctrine
of stare decisis, by
which it is the ratio decendi
of a judgment that has binding
effect and not the conclusion.
See
Gorman v Rep [2003-2004] SCGLR
784. Because the
Court of Appeal did not express
themselves on these issues
relating to the right principles
of law applicable in this case,
it has led Mr Peter Zwenness
Esq, learned counsel appearing
for the 3rd
defendant, to take the position
before us that the Court of
Appeal affirmed the trial
judge’s finding that Act 773 is
the applicable law for a
correct resolution of the case.
Counsel appears to feel
constrained to defend that
finding and has argued,
strenuously, at great length
trying to justify that finding.
As we shall demonstrate infra,
the inadequate appreciation of
the nature of the cause of
action between the plaintiff and
the 3rd defendant
affected to some extent the
comprehensiveness of the legal
analysis even of the Court of
Appeal.
The best approach to gain a good
appreciation of this case, which
admittedly is complicated and
gave us anxious moments during
the consideration of our
judgment, is to first consider
the cause of action that, in
law, can be sued upon by the
plaintiff against John Oseku
Ankrah. After that has been
done, then an examination of the
arguments on whether the 3rd
defendant is liable for his
actions can be undertaken. This
is critical because the legal
basis on which the 3rd
defendant may be liable for the
actions of its Finance Manager
will depend on the nature of the
cause of action, either in
contract or in tort, against
John Oseku Ankrah. In his
judgment the trial judge stated
that, “He (John Oseku Ankrah)
fraudulently committed his
employers to a contract or
agreement which the employers
had no knowledge of”. Then at
another part of the judgment he
stated as follows; “It has been
earlier held that the security
created with the account
receivable is not enforceable
against the 3rd defendant. In
accordance with section 25(3) of
the Borrowers and Lenders Act,
2008 (Act 773) though the said
security is not enforceable, the
money which was secured shall
immediately become payable…” But
what must be noted is that John
Oseku Ankrah did not guarantee
the loans that were extended to
2nd defendant in this
case. It was the 1st
defendant who guaranteed the
loans. Sections 1 and 2 of Act
773 gives the matters the Act
applies to as follows;
Section 1. Application
(1) This Act applies to
(a) a credit agreement
between parties who deal at
arm’s length except;- (i) a
credit agreement covering an
amount of less than one hundred
Ghana Cedis (GH¢ 100) or an
amount determined by the Bank of
Ghana; (ii) any other credit
agreement exempted by the Bank
of Ghana by notice under this
Act.
(b) a credit guarantee
where the guarantee is only in
respect of a credit facility or
credit transaction covered by
this Act.
2. Meaning of credit agreement
For the purpose of this Act a
credit agreement is an agreement
in the nature of a credit
facility, a credit transaction,
a credit guarantee or any
combination of these.
A credit guarantee as stated
under section 5 of Act 773 is;
“an agreement is a credit
guarantee if in that agreement
a third party undertakes
to satisfy on demand an
obligation of a borrower in a
credit facility or credit
transaction to which this Act
applies.” (emphasis
supplied).
John Oseku Ankrah wrote one set
of letters and countersigned
another set written by the
plaintiff and the plaintiff says
that it relied on these
documents and advanced the loans
to the 2nd defendant.
The first set of letters
confirmed the fake invoices and
stated that the 3rd
defendant owed some money to the
2nd defendant and was
willing to pay it jointly to the
plaintiff and 2nd
defendant. It made no reference
at all to any obligation 2nd
defendant owed the plaintiff. In
fact, at the time the very first
letter was written the 2nd
defendant had not applied for
the first loan. The second set
of letters written by the
plaintiff required of the
Finance Manager to agree to pay
to the plaintiff, in the future,
money due to the 2nd
defendant. The money was
supposed to be 2nd
defendant’s own money. The
letters make no reference to the
loan and did not commit John
Oseku Ankrah to satisfy on
demand any loans to be extended
to the 2nd defendant
so they were not credit
guarantees. The one who
guaranteed the loans to the 2nd
defendant was the 1st
defendant not John Oseku Ankrah.
So, as rightly contended by
Counsel for the plaintiff, the
legal relationship between the
plaintiff and 1st and
2nd defendants was
different from that between the
plaintiff and John Oseku Ankrah.
Whereas there were credit
agreements between the
plaintiff and the 2nd
defendant and credit guarantees
between it and 1st
defendant on grounds of which
Act 773 might, depending on the
issues in contention, be
applicable in the resolution of
a dispute between them, the
same cannot be said of the
legal relationship between the
plaintiff and John Oseku Ankrah.
There was neither a credit
agreement nor a credit guarantee
between the plaintiff and John
Oseku Ankrah so Act 773 is not
applicable in the case that was
made on the pleadings against
the 3rd defendant. In
fact, 1st defendant
who could have argued that the
credit guarantee he provided to
the plaintiff was not
enforceable against him because
it was not registered as
required by Act 773 did not
plead that in his defence.
When the case is viewed with
clear legal lenses this way, it
becomes plain that the trial
judge unfortunately erred when
he suo motu introduced
Act 773 into this case. Yes it
is true that John Oseku Ankrah
by signing the letters Exhibits
“D” and “L” promised to pay
monies due 2nd
defendant to the plaintiff at a
future date, but he failed to do
so. However, even from the
pleadings it was clear that the
2nd defendant did not
supply any goods to the 3rd
defendant and no money was owed
to it. So those letters
described as “undertakings” were
plainly fake documents and such
documents cannot create any
legal rights even if they were
registered. The applicable Latin
maxim is; ex nihilio nihil
fit, meaning; out of nothing
comes nothing. In the Court of
Appeal. Counsel for the
plaintiff submitted as follows;
“Appellants claim against the
Respondents is based on the fact
that it failed, refused and or
neglected to comply with its
payment instructions as
contained in the letters…”
The truth of the matter is that
there was no payment to be made
in the first place so how was 3rd
defendant expected to comply
with payment instructions? The
trial judge by implying that if
the fictitious undertakings had
been registered under Act 773
they could be enforced against
the 3rd defendant
fell in a grave error.
But that does not end the matter
of possible cause of action the
plaintiff has against John Oseku
Ankrah. He made some
representations to the plaintiff
which he expected it to rely on
and it says it relied on those
representations and has suffered
loss. These representations were
clearly fraudulent so the
plaintiff has a cause of action
at common law in tort for
damages
for deceit against John
Oseku Ankrah. See the cases of
Pasely
v Freemen (1789) 3 Term Reps 51
and Derry v Peek (1889) 14
App Cas 337,
where the House of Lords gave
the now famous definition of
fraud. The court stated that;
“in
an action of deceit the
plaintiff must prove actual
fraud. Fraud is proved when it
is shewn that a false
representation has been made
knowingly, or without belief in
its truth, or recklessly,
without caring whether it be
true or false.”
The facts in Pasely v Freeman
were that Pasley consulted
Freeman about the financial
condition of one John Falch
before Pasley agreed to sell to
Falch a number of goods on
credit. Pasley inquired about
Falch’s credit history to
determine if he was a credit
risk. Freeman gave Pasley a
favorable view of Falch, and
Pasley proceeded with selling
goods to Falch on credit. When
Falch defaulted, Pasley sued
Freeman for the value of the
goods on the ground that Freeman
knowingly misrepresented Falch’s
credit risk.
Upholding the claim of the
plaintiff the court held that;
A false affirmation, made by the
defendant with intent to defraud
the plaintiff, whereby the
plaintiff receives damage, is
the ground of an action upon the
case in the nature of deceit. In
such an action, it is not
necessary that the defendant
should be benefited by the
deceit, or that he should
collude with the person who is.
Though the representations made
by John Oseku Ankrah in this
case were not as to the general
credit worthiness of the 2nd
defendant, which if he did may
have drawn the provisions of
section 14(2) of the
Contracts Act 1960, (Act 25)
into the case, what he wrote
and said to the effect that 2nd
defendant had money to collect
from the 3rd
defendant influenced the
plaintiff to advance the credit
and that is actionable at common
law. Some jurisdictions now have
enacted statutes on
misrepresentations under which
various causes of action are
clearly provided for. The
central question in this case is
therefore, whether, in the
circumstances of this case, the
3rd defendant can be
held liable for the tort of
deceit for which John Oseku
Ankra is prima facie liable to
pay damages to the plaintiff?
Regrettably this issue eluded
both the High Court and the
Court of Appeal with the High
Court straying off into areas
that further confused the issues
in contention in the case.
But it appears to us that the
plaintiff could also have
pleaded its case in a clearer
manner. The reliefs endorsed on
the writ of summons and the
averments in the statement of
claim do not distinguish the
cause of action against the 1st
and 2nd defendants
from that against the 3rd
defendant, but there is a world
of difference between them as
shown above. The cause of action
against the 1st and 2nd
defendant was in contract and it
was a simple case of debt owed,
whereas the appropriate cause of
action against the 3rd
defendant is in tort. This is a
case where the plaintiff would
have been justified in bringing
separate suits for the
convenience of the trial. We
take this opportunity to
deprecate the emerging wrong
practice where in setting down
issues for trial in a civil case
“whether or not the plaintiff is
entitled to her claim” is put
down as an issue for trial. The
whole trial is aimed at
determining whether or not the
plaintiff is entitled to the
reliefs claimed so how can that
be a distinct issue? This
practice is a product of lazy
work and a stop must be put to
it. This case also serves as a
reminder to all lawyers of the
first principles we learn in
civil procedure to always
ascertain the cause of action
that arises on the facts of a
case before drafting our claim.
The cause of action determines
the relevant evidence to lead
and the law applicable in the
case thereby saving resources
and time expended in adducing
unnecessary evidence and ending
up confusing and embarrassing
the trial. This is not the first
time this reminder is being
given by this court.
THE APPEAL TO THE SUPREME COURT.
Now, to the substantive grounds
on which the plaintiff has
impeached the judgment of the
Court of Appeal. As previously
stated, the evidence established
that the plaintiff relied on the
representations made by the 3rd
defendant’s Finance Manager to
advance the loans to the 1st
and 2nd defendants so
in order to succeed in this
appeal the plaintiff must
convince us that the 3rd
defendant is liable for the
fraudulent acts of its Finance
Manager. Section 143 of Act 179
(supra) clearly provides that a
company may in appropriate cases
be held liable for the
fraudulent acts of its officer
or agent so the fact that John
Oseku Ankrah acted fraudulently
alone is not sufficient ground
for the 3rd defendant
to escape liability.
My Lords, it is a self evident
postulate of law that a limited
liability company, being an
artificial legal person, can
only act through the
instrumentality of human beings
who stand in certain legal
relationships with the company.
But the law is very careful in
setting the conditions under
which the acts of those persons
who stand in legal relationships
with a company qualify as acts
of the company itself or are
otherwise binding on it.
Secondly, the law distinguishes
acts of the company from
acts of its officers and agents
that may be binding on the
company but are not deemed
acts of the company. Stated
differently, it is not the acts
of any person with a
relationship to a company that
are considered acts of the
company and even for those
whose relationship warrants
their acts to be deemed acts
of the company, it is not
every act of theirs that the law
treats as acts of the company.
The first category of persons
whose acts amount to acts of the
company is stated under Section
139(1) of Act 179 in the
following terms;
139. Acts of the company
(1) An act of the members in
general meeting, the board of
directors, or a managing
director while carrying on in
the usual way the business of
the company shall be treated as
the act of the company itself;
and accordingly the company
shall be criminally and civilly
liable for that act to the same
extent as if it were a natural
person.
By this provision the acts of
the members in general meeting,
the board of directors or a
managing director shall be
treated as acts of the company
provided this category of
persons act in the course of
carrying out the business of the
company in the usual way the
company’s business is carried
out. Under those conditions, a
fraudulent misrepresentation
would be deemed as made by the
company and its liability would
arise, both criminal and civil.
This provision is not applicable
in this case since the act in
question was not that of members
in general meeting or board of
directors or a managing director
so there is no need to examine
it in detail.
The other category of persons
whose acts, though normally are
not acts of a company under of
Section 139(1) above, but may be
deemed acts of the company under
certain conditions, is that of
officers and agents of the
company. The conditions under
which their actions would be
deemed acts of the company are
stated under Section 140(1) as
follows;
140. Acts of officers or agents
(1) Except as provided in
section 139, the acts of an
officer or agent of a company
are not the acts of the company,
unless,
(a) the company, acting through
its members in general meeting,
board of directors, or managing
director, has expressly or
impliedly authorised that
officer or agent to act
in the matter; or
(b) the company, acting under
paragraph (a) has represented
the officer or agent as having
its authority to act
in the matter, in which
event the company shall be
civilly liable to a person who
has entered into the
transaction in reliance on
that representation, unless that
person had actual knowledge that
the officer or agent did not
have authority or unless, having
regard to the position with, or
relationship to, the company,
that person ought to have known
of the absence of authority. (emphasis
supplied)
My Lords, particular attention
must to be paid to the words
used by the legislator in this
provision. The authorization has
to be in respect of the
particular act that is the
subject of the enquiry. The
words are “authorized to act
in THE matter” and
“entered into THE transaction”.
Therefore, for the category of
officers and agents, their acts
can only be treated as acts
of the company, if they have
been given authority, either
expressly or impliedly, to
undertake the particular act
in question by the members
in general meeting, board of
directors or a managing
director. For example, this type
of situation may arise where a
person writes a letter to a
managing director requesting for
information concerning business
of the company and the managing
director minutes on the letter
to an officer of the company to
deal with the person and provide
the particular information
requested for. In that situation
the acts of the assigned officer
in providing the particular
information requested for
becomes acts of the company on
the strength of section 140(1)
of Act 179. It is paramount to
observe that the law has been
careful to limit the acts of
officers and agents that could
be deemed acts of the company to
particular transactions.
Officers and agents have no
general authority for their acts
to be turned into acts of the
company even if they are
carrying out the business of the
company in the usual manner.
Secondly, even if an act of an
officer qualifies as an act of
the company, the liability of
the company arises only in
respect of civil claims and does
not cover criminal liability.
It was on this provision that
the Court of Appeal rested their
judgment and held that the
Finance Manager did not have any
express or implied authorization
from the company to verify the
invoices in question or to write
the letters agreeing to pay
monies directly to the
plaintiff. We think the Court of
Appeal correctly interpreted and
applied section 140(1) of Act
179 because the authorization
under this provision that makes
the act of an officer or agent
the act of the company has
limited them to the particular
act that has generated the
dispute and is not acts in a
general sense. There is another
provision on authority of an
officer or agent to act
generally and bind a company in
respect of its business but that
is different.
The provision of our law at the
time on the general power or
authority of officers and agents
was section 142 of Act 179 which
states that;
142. Presumption of regularity
(1) A person having dealings
with a company or with someone
deriving title under the company
is entitled to assume,
(b) that a person described in
the particulars filed with the
Registrar pursuant to sections
27 and 197 as a director,
managing director or secretary
of the company, or represented
by the company, acting through
its members in general meeting,
board of directors, or managing
director, as an officer or agent
of the company, has been duly
appointed and has authority to
exercise the powers and perform
the functions customarily
exercised or performed by a
director, managing director, or
secretary of a company carrying
on business of the type carried
on by the company or customarily
exercised or performed by an
officer or agent of the type
concerned;
(c) that the secretary of the
company, and any other officer
or agent of the company having
authority to issue documents or
certified copies of documents on
behalf of the company has
authority to warrant the
genuineness of the documents or
the accuracy of the copies so
issued;
(d) that a document has been
duly sealed by the company if it
bears what purports to be the
seal of the company attested by
what purports to be the
signatures of two persons who,
in accordance with paragraph
(b), can be assumed to be a
director and the secretary of
the company; and the company and
those deriving title under it
are estopped from denying the
truth of that assumption.
2) For the purposes of
subsection (1),
(a) a person is not entitled to
make any of those assumptions if
that person had actual knowledge
to the contrary or if, having
regard to the position with, or
relationship to, the company,
that person ought to have known
the contrary;
(b) a person is not entitled to
assume that any one or more of
the directors of the company has
or have been appointed to act as
a committee of the board of
directors or that an officer or
agent of the company has the
company’s authority by reason
only that the company’s
Regulations provide that
authority to act in the matter
may be delegated to a committee
or to an officer or agent.
In this final appeal the
plaintiff has relied heavily on
this provision. The line of
argument by the plaintiff on
this provision is directed at
the defence of the 3rd
defendant that its Finance
Manager had no authority to
approve anything to do with
finances in the company and that
it is only Chinese officials who
can give the verification and
approval to pay monies directly
to the plaintiff as the Finance
Manager purported to do. In
answer the plaintiff has argued
vigorously, that by virtue of
Section 142 (1)(b) of Act 179 it
was entitled to assume that the
Finance Manager had authority to
verify the invoices purporting
to emanate from the 3rd
defendant. By Section 142, our
company law legislation at the
material time enacted into law
the common law doctrine of
presumed regularity which was
laid down in the English case of
Royal
British Bank v Turquand (1856) 6
E and B 327. The
doctrine was first referred to
as the company “indoor
management rule” by Lord
Hatherley in the House of Lords
case of
Mahony v East Holiford Mining
Co (1874-75) LR 7, HL 879.
In the Supreme Court case of
Godka
Group of Companies v P.S. Global
[2001-2002] SCGLR 918
Afreh, JSC explained the
doctrine as follows at page 932;
“In any case a person
contracting with a company is
not required to demand the
production of a resolution
authorizing the board, the
general meeting, an officer or
agent of the company, as the
case may be, to enter into the
contract. It has been
established since the case of
the Royal British Bank v.
Turquand (1856) 6 E and B 327;
[1843-60] All E.R. Rep. 435
[Exchequer Chamber] that a
person dealing with a company is
entitled to assume, in the
absence of facts putting him on
notice or inquiry, that there
has been due compliance with all
matters of internal management
and procedure required by the
Regulations of the company.
This is the Rule in Turquand’s
case or the “Indoor Management”
Rule. This rule is codified by
our Companies Code, Act 179, in
sections 139 to 143. Under s.142
(2), if the company has held out
some one as its agent it is
estopped from denying the
appointment; and a de jure or de
facto officer of the company can
be assumed to have the usual
powers and duties of that sort
of officer.”
It is vital to understand the
context and purpose of the
indoor management rule which is
aimed to protect persons
contracting with companies from
liability or loss where that
company’s duties have been
executed illegally or even
fraudulently. Where an officer
or agent has entered into a
binding and enforceable business
undertaking in the name of a
company, the rule prevents the
company from repudiating that
binding commitment on the ground
of an irregularity in the
appointment of the officer or
agent or want of authority on
her part. But in this case,
notwithstanding the defence put
up by the 3rd
defendant, we have earlier
explained that the Finance
Manager did not enter into any
legally
binding and enforceable
agreement with the plaintiff
so his authority from the 3rd
defendant to bind it does not
arise. The letters John Oseku
Ankrah signed were based on
non-existent facts and clearly
fictitious. If he had guaranteed
the loans extended to the 2nd
defendant that would have been
enforceable against him and the
argument of the 3rd
defendant being bound to satisfy
that guarantee though it did not
authorize him, could be
considered but not when he did
not guarantee the loans.
Consequently, because of the
view we have taken of the nature
of the cause of action that
arises against John Oseku
Ankrah, a consideration of the
lengthy arguments on presumed or
ostensible authority made on
behalf of the plaintiff in its
statement of case will not, in
our opinion, lead to the proper
resolution of this case.
Besides, the 3rd
defendant countered the
plaintiff’s submissions on
section 142 (1) by relying on
section 142(2) and argued that
the plaintiff ought to have
known that the verification of
the invoices should have been
done with the Chinese management
of the company on account of the
plaintiff’s knowledge gained
from earlier dealings with it.
The plaintiff denied such
knowledge but is it not
revealing that after events
showed that John Oseku Ankrah
may not have been dealing
aboveboard with them, the
plaintiff contacted the Chinese
Managing Director of the 3rd
defendant to re-verify the
claims of the Finance Manager?
We take judicial notice of the
practice of bankers to carefully
verify the bona fides of
customers who apply for loans as
was attempted in this case by
the plaintiff. Except in this
case the plaintiff’s
verification, to say the least,
was sloppy in that, to verify a
letter purporting to emanate
from a company not signed by the
managing director they went to
speak to the very officer who
signed it. Basic prudence would
seem to suggest that the first
verification should have been
done with the Managing Director.
As has been demonstrated above,
under our company law
legislation, members in general
meeting, board of directors and
a managing director, in that
order of authority, occupy very
important positions in the
scheme of affairs of a company
so it is always safer to close
substantial deals with a company
with their direct involvement or
at least of the managing
director where that is feasible
as in this case. Exhibit “D”
that the plaintiff claims it
relied on does not bear the
stamp of the 3rd
defendant and that ought to have
alerted it that John Oseku
Ankrah was probably acting by
himself. Exhibit “L” for the
second loan bears not the
corporate stamp of the 3rd
defendant but that of the
Financial Manager, whereas the
plaintiff affixed its corporate
stamp against the signature of
its Chief Executive Officer.
As for the claim of the
plaintiff that the 3rd
defendant had by the Tonalis
transaction established a
practice whereby the Finance
Manager was the responsible
officer for verification of
invoices, that is difficult for
us to take. For we observe that
Exhibit “Q” on the Tonalis
transaction is dated 17th
July, 2012. This was after the
plaintiff had already granted
the second loan to the 2nd
defendant on 16th
July, 2012 per the loan
agreement Exhibit “K” series.
The payments on that transaction
were made by cheque dated 5th
March, 2013 (Exhibit “S” series)
directly to Tonalis, long after
all the loans had been paid out
by the plaintiff. Therefore, the
Tonalis transaction cannot soar
up the plaintiff’s collapsed
case that the 3rd
defendant held out John Oseku
Ankrah as the responsible
officer in matters of
verification of invoices.
However, though none of sections
139(1), 140 (1) and 142 have
been found to ground joint or
several liability of the 3rd
defendant for the wrongdoing of
its Finance Manager, its
liability may nevertheless arise
under Section 140(3) of Act 179
which provides as follows;
(3) This section shall not
derogate from the vicarious
liability of a company for the
acts of its employees while
acting within the scope of their
employment.
We have earlier in this delivery
explained that the plaintiff’s
cause of action against the 3rd
defendant lies in tort so it is
appropriate to consider whether
on the law and the facts the 3rd
is vicariously liable for
damages for deceit through the
fraudulent misrepresentations by
its Finance Manager. The parties
argued this ground in their
submissions at various stages of
the case, though not as
extensively as the other
provisions of Act 179, which
have been shown not to be really
germane in this case. For a
company registered under Act 179
to be held vicariously liable
for the acts of its employees,
the statute says the employees
must have been acting within the
“scope of their employment”. In
apparent reference to this
provision, the plaintiff in his
statement of case has submitted
as follows;
“We state that from the above
provisions, a company would be
held for all actions of its
officers including unauthorized
acts of its officers if the
officer was acting in the cause
of his employment. My Lords,
abundant and undisputed evidence
was led some of which have been
stated in ground 1 above to the
effect that John Oseku Ankrah
was the Country Finance Manager
of Respondent.”
In his written submissions in
the Court of Appeal, Counsel for
the plaintiff argued as follows;
“we state that contrary to
what the learned judge said, the
actions of John Oseku Ankrah
make 3rd defendant
(his employer) vicariously
liable for the wrongful acts of
his. It is erroneous for the
learned judge to hold that in so
far as the acts of John Oseku
Ankrah were not officially known
to 3rd defendant, it
was not liable. This is so in
that 3rd defendant
such as the appellant have no
control over the recruitment of
staff of companies they deal
with. If therefore John Oseku
Ankrah does not act in the
normal cause of duty of 3rd
defendant, its employer should
be held liable for the acts.”
On the issue of the
vicarious
liability of the 3rd
defendant, its Counsel in the
statement of case quoted and
relied on some English
decisions, obviously for their
persuasive value. Particular
reference was made to the cases
of
Reuben vrs Great Fingal
Consolidated [1906] 1 AC 439
(HL) and Armagas Ltd vrs
Mundogas SA [1986] 2 ALL ER 385
(HL). He quoted
the following statement in the
speech of Lord Kieth of Kinkel
who delivered the lead judgment
of the House of Lords in the
latter case.
“In the end of the day the
question is whether the
circumstances under which a
servant has made the fraudulent
misrepresentation which has
caused loss to an innocent party
contracting with him are such as
to make it just for the employer
to bear the loss. Such
circumstances exist where the
employer by words or conduct has
induced the injured party to
believe that the servant was
acting in the lawful course of
the employer’s business. They do
not exist where such belief,
although it is present, has been
brought about through misguided
reliance on the servant himself,
when the servant is not
authorized to do what he is
purporting to do, when what he
is purporting to do is not
within the class of acts that an
employee in his position is
usually authorized to do, and
when the employer has done
nothing to represent that he is
authorized to do it.”
Counsel for the 3rd
defendant concluded his
submissions as follows;
“On the principles of fairness
and good conscience a Master
should not be held liable for
the acts of his servant or
employee where the servant was
on a “fraudulent frolic” of his
own.”
The above submissions of the
parties portray the difficult
conflicting policy choices that
have confronted the law for
centuries particularly with the
ever increasing involvement of
limited liability companies in
almost every aspects of life. In
the current state of human
affairs most services are
rendered by limited liability
companies some not resident in
one jurisdiction but they act
through numerous officers and
agents all over and it is
impossible for a company to
exercise effective control over
all of them. In such
circumstances, there is the need
to protect companies against
acts of their errant and dodgy
officers and agents, otherwise
companies will be burdened with
huge liabilities through their
unauthorized and fraudulent acts
and cause them to go bankrupt, a
situation not good for
commerce. The other side of the
coin is the valid argument of
the plaintiff, that third
parties who deal with companies
only through their human agents
deserve to be protected against
unauthorized acts of the
company’s representative since
the third parties have no
control over who the company
choses to represent it and deal
with public and it is not
possible for third parties to
always verify whether an officer
or agent has authority to do
what she does. The law has over
the years tried to maintain a
balance between these two
competing policy objectives
through the provisions in
company law statutes such as Act
179 and principles evolved by
judges construing statutory
provisions and developing and
expounding the common law.
The term “scope of employment”
has been considered in a number
of cases in our jurisdiction
and the courts have done this in
line with the construction of
the term by other common law
judges. See
Agogro
v Ago [1973] 1GLR 43; Osei v
State Farms Corp & Anor [1964] 1
GLR 649; and Guardian Royal
Exchange Assurance v Appiah
[1984-86] 1 GLR 52, CA. In
the Court of Appeal case of
Attorney-General & Anor v Dadey
[1971] 1 GLR 228 at page
233, Azu Crabbe JA (as he then
was) approved of the following
approach to answering the
question whether an employee was
acting within the scope of her
employment per Diplock J (as he
then was) in Hilton
v. Thomas Burton (Rhodes) Ltd.
[1961] 1 All E.R. 74 at
pages 77 and 78,
“The question remains, and it is
probably the most important
practical question in this case:
Are the first defendants liable,
vicariously, for the second
defendant's negligence? I think
that the true test can be
expressed in these words: Was
the second defendant doing
something that he was employed
to do? If so, however improper
the manner in which he was doing
it, whether negligent as in
Century
Insurance Co., Ltd. V. Northern
Ireland Road Transport Board
([1942] 1 All E.R. 491; [1942]
A.C. 509), or even fraudulently,
as in Lloyd v. Grace, Smith &
Co. ([1912] A.C. 716), or
contrary to express orders, as
in Canadian Pacific Ry. Co. v.
Lockhart ([1942] 2 All E.R. 464;
[1942] A.C. 591), the master
is liable. If, however, the
servant is not doing what he is
employed to do, the master does
not become liable merely because
the act of the servant is done
with the master's knowledge,
acquiescence, or permission. To
say, as is sometimes said, that
vicarious liability attaches to
the master where the act is an
act or falls within a class of
act, which the servant is
authorised to do, may be
misleading. In one sense a
master may be said to authorise
a servant to do an act when he
grants the servant permission to
do something for the servant's
own benefit, which, without such
permission, would be a breach of
his contract of employment or
even a tort, as when he permits
him to take time off for
refreshment in working hours, as
in Crook
v. Derbyshire Stone, Ltd.
([1956] 2 All E.R. 447), or
permits him to use the master's
property, as in
Higbid v.
R. C. Hamnett, Ltd. ((1932) 49
T.L.R. 104). In such cases,
the master is not liable, for
although he may be said, in a
loose sense, to authorise the
act,
it is nevertheless not an
act which the servant is
employed to do . . . It may be
he was using his master's
vehicle with his master's
permission, but as Higbid v.
R.C. Hamnett, Ltd. Shows, that
is not enough. The true test is:
Was he doing something that he
was employed to do?" (emphasis
supplied).
In that case, a driver of the
Ghana National Fire Service at
Sekondi went to work and decided
to give a lift to the driver he
had relieved by dropping him off
at his house with the official
vehicle. This was prohibited by
the office operations manual.
Further to that, when he took
the relieved driver to his house
he waited for him to change his
dressing and then he drove him
to a wake-keeping of one of
their deceased colleagues at
Ketan, a distance away. On his
way back to the station the
vehicle got involved in an
accident damaging the vehicle of
the plaintiff so he sued the
driver and his employer,
claiming the employer was
vicariously liable. At page 234
Azu Crabbe JA reasoned as
follows;
“It is clear that on the date
when the accident occurred there
had been no major fire which
required reinforcement, and Mr.
Jabin, as the officer in charge
of his platoon, must have taken
the decision by himself to give
another employee of the Ghana
National Fire Service a lift to
Ketan. But to hold the defendant
vicariously liable for the
negligence of Jabin, it is, in
my view, not sufficient that his
wrongful act was done in the
course of doing something of a
kind which he usually had
authority to do. It must further
be shown that Jabin was, at the
time of the accident, performing
an official duty, and was not
merely on a frolic of his own.
The fundamental question in this
case is: Was Jabin engaged on a
duty he was employed to do at
the time of the accident? I
think he was not.”
The Court of Appeal unanimously
set aside the judgment of the
High Court which had held that
the employer was vicariously
liable. Therefore, contrary to
the argument of the plaintiff,
the fact that an employee
committed the tort while in the
employment of the employer and
was acting in a matter related
to the work for which he is
employed alone is not sufficient
to found vicarious liability
against an employer. Yes, Jabin
was employed to drive the Fire
Service vehicle and he was
driving that vehicle during his
working hours at the time the
accident occurred, but at the
particular moment of the
accident he was clearly not
engaged in the work of his
employer but on a frolic of his
own.
In the more recent case of
WM
Morrison Supermarkets plc v
Various Claimants [2020] UKSC
12 the Supreme Court of
the United Kingdom discussed the
nature of actions by an
employee that would be
classified as falling within the
scope of her employment. The
facts of that case are that Mr
Skelton worked in the internal
audit section of Morrison
Supermarkets chain of the United
Kingdom. He was taken through
disciplinary proceedings over an
infraction of office rules and
he became angry with the
company. Subsequently, in the
course of his work he was given
access to the employees payroll
data of the company which he was
to forward to external auditors,
KPMG for official work. When he
gained the access he made a copy
of the employees data on his
personal pen drive before
sending the data to the
auditors. After transmitting the
data to the auditors, he created
a fake internet account and
released the personal data of
98,998 employees onto a website
on the internet and sent copies
to some newspapers. The workers
sued the employer for damages
for the tort of breach of
confidence claiming the employer
was vicariously liable for the
wrongful act of Mr Skelton. The
High Court and the Court of
Appeal held that Mr Skelton’s
act of releasing the plaintiff’s
personal data to the public was
closely connected to the work he
was employed to do so the
company was vicariously liable.
The employer appealed to the
Supreme Court.
Lord Reed, with whom the rest of
the panel agreed, said as
follows at paragraph 35 of his
judgment;
“35. Clearly, the mere fact that
Skelton’s employment gave him
the opportunity to commit the
wrongful act would not be
sufficient to warrant the
imposition of vicarious
liability: see, for example,
Morris v
C W Martin & Sons Ltd [1966] 1
QB 716, 737, and Lister [2002] 1
AC 215, paras 25, 45, 50,
59, 65, 75, and 81-82. The
courts below, however, treated
it as important that Skelton’s
disclosure of the data on the
Internet was, as the judge said
“closely related to what he was
tasked to do” ([2019] QB 772,
para 186): a remark which the
Court of Appeal described as
“plainly correct” ([2019] QB
772, para 63). The fallacy in
that approach was explained by
Lord Wilberforce in
Kooragang
Investments Pty Ltd v Richardson
& Wrench Ltd [1982] AC 462,
which concerned an employee who
was authorised to carry out
valuations, and negligently
carried out a valuation without
authority from his employers and
not on their behalf. Lord
Wilberforce rejected the
argument that so long as the
employee is doing acts of the
same kind as those which it is
within his authority to do, the
employer is liable, and is not
entitled to show that the
employee had no authority to do
them. He said at p 473:
“the underlying principle
remains that a servant, even
while performing acts of the
class which he was authorised,
or employed, to do, may so
clearly depart from the scope of
his employment that his master
will not be liable for his
wrongful acts.” (emphasis
supplied).
The Law Lord then concluded his
judgment relieving the employer
of vicarious liability reasoning
as follows;
“47. All these examples
illustrate the distinction drawn
by Lord Nicholls at para 32 of
Dubai Aluminium [2003] 2 AC 366
between “cases … where the
employee was engaged, however
misguidedly, in furthering his
employer’s business, and cases
where the employee is engaged
solely in pursuing his own
interests: on a ‘frolic of his
own’, in the language of the
time-honoured catch phrase.” In
the present case, it is
abundantly clear that Skelton
was not engaged in furthering
his employer’s business when he
committed the wrongdoing in
question. On the contrary, he
was pursuing a personal
vendetta, seeking vengeance for
the disciplinary proceedings
some months earlier. In those
circumstances, applying the test
laid down by LordNicholls in
Dubai Aluminium in the light of
the circumstances of the case
and the relevant precedents,
Skelton’s wrongful conduct was
not so closely connected with
acts which he was authorised to
do that, for the purposes of
Morrisons’ liability to third
parties, it can fairly and
properly be regarded as done by
him while acting in the ordinary
course of his employment.”
The principles of law relied on
in the WM Morrissons case
are the same as those Azu
Crabbe, JA applied in the case
of Attorney-General v Dadey
so we shall analyse the
evidence in this case in line
with those principles. Now, the
first set of letters John Oseku
Ankrah wrote confirming the fake
invoices were stated on their
face to be at the request of
the 2nd defendant. The 3rd
defendant had no obligation as
part of its business to assist
the 2nd defendant in its
dealings with the plaintiff.
Secondly, it has not been
contended that credit
referencing bureau services was
part of the usual business of
the 3rd defendant. It is
therefore plain that in engaging
with the plaintiff to further
the business of the 2nd
defendant, John Oseku Ankrah was
on a frolic of his own and not
doing work in pursuit of work he
was employed to do. Similarly,
the letters he signed agreeing
to pay the non-existent monies
to the plaintiff were at the
request of the plaintiff and to
advance the business of the
plaintiff and had nothing to do
with the business of 3rd
defendant who employed him. In
fact, the requests were made by
the plaintiff direct to the
Finance Manager and in agreeing
he did not affix the stamp of
the 3rd defendant on the first
letter Exhibit “D” and for the
second letter, Exhibit “L”, he
affixed his stamp, not the
corporate stamp of the 3rd
defendant.
Under
these circumstances, we are of
the opinion that in his
engagements with the plaintiff,
John Oseku Ankrah acted on a
frolic of his own for purposes
of the businesses of the 2nd
defendant and the plaintiff. He
was not engaged in work that he
was employed to do for the 3rd
defendant so he was not acting
within the scope of his
employment and the 3rd
defendant cannot be held
vicariously liable.
It is for the reasons explained
above that the appeal fails and
same is accordingly dismissed.
G. PWAMANG
(JUSTICE OF THE SUPREME COURT)
P. BAFFOE-BONNIE
(JUSTICE OF THE SUPREME COURT)
Y. APPAU
(JUSTICE OF THE SUPREME COURT)
S. K. MARFUL-SAU
(JUSTICE OF THE SUPREME COURT)
A.
M. A. DORDZIE (MRS.)
(JUSTICE OF THE SUPREME COURT)
C. J. HONYENUGA
(JUSTICE OF THE SUPREME
COURT)
COUNSEL
SAMUEL M. CODJOE ESQ FOR THE
PLAINTIFF/APPELLANT/APPELLANT.
PETER ZWENNES FOR THE 3RD
DEFENDANT/RESPONDENT/RESPONDENT. |
