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JUDGMENT:
Plaintiff herein has sued the
Defendant for the following
reliefs:
a.
A
Declaration that there is a
valid Lease between the
Plaintiff and its Lessor.
b.
A
declaration that the agreement
signed by the Plaintiff and the
Defendant on 12th
June, 2008 is valid and operates
to transfer Plaintiffs’ interest
in the property to the
Defendant.
c.
Payment of the outstanding
balance of the agreed
consideration contained in the
agreement.
d.
Interest on the said amount
from the time the payment became
due till the date of its
payment.
e.
An
injunction to restrain the
Defendant, its agents, assigns
or privies from abrogating its
agreement with the Plaintiff.
f.
Damages for breach of contract.
g.
An
order to compel the Defendant to
perform its obligations under
the agreement.
h.
Cost
on full indemnity basis.
Plaintiff’s case is that it took
up a Lease of the first (upper)
floor of the property known as
Anona House situate at C125,
Subukwe Close, Farrar Avenue,
Adabraka from Louis Casely –
Hayford sometime in 2006 for a
term of two (2) years renewable
(Exhibit “B”). At the expiration
of the two years on 1st
June 2008, the Lease was renewed
for another two year term,
commencing from 1st
June, 2008 (Exhibit 1), with the
ground (lower) floor added to
the property being leased.
Subsequent to the renewal of
Plaintiff’s Lease, and with the
knowledge and consent of its
Lessor (Louis Casely-Hayford)
that the whole property be
leased to the Plaintiff in order
to sublet to the Defendant for a
higher rent, the Plaintiff
entered into an Agreement
(Exhibit “A”) with the
Defendant. Under Exhibit “A”
Plaintiff was to sublet the
property to the Defendant for a
period of two years certain.
It is Plaintiff’s further case
that the agreed rent for the
said term was $60,000.00 per
annum payable in advance and to
be paid upon execution of the
Agreement. The parties
envisaged that the Agreement
would be executed on 1st
June 2008, but this was not done
until the 12th of
June, 2008. According to
Plaintiff, the delay in the
execution of the Agreement was
due to Defendant’s request that
Plaintiff undertake several
renovations and improvements to
the property, which the
Plaintiff obliged even though
such renovations and
improvements were not part of
the Plaintiff’s obligations
under the Agreement. When the
Agreement was finally executed
on the 12th of June,
2008, the Defendant contrary to
the terms of the Agreement paid
only $30,000.00 being 50% of the
annual rent it was required to
pay, promising to settle the
balance within the shortest
possible time. The Defendant
only made a further payment of
$5,000.00 sometime in August
2008 to bring the total payment
made by the Defendant to
$35,000.00.
Plaintiff claims that having
received only a little over 50%
of the rent from Defendant, and
in view of the fact that the
Plaintiff expected to pay its
own rent to its Lessor from the
rent to be received from the
Defendant, and also coupled with
the Defendant’s request that
additional improvements to be
made on the property, the
Plaintiff also could only pay
$10,000.00 being 50% of its rent
of $20,000.00 to the Lessor.
The agreed terms of payment
between the Plaintiff and its
Lessor was Euro 25,800
(equivalent to $40,000 at that
time) per annum payable six (6)
months in advance, as provided
for by the renewed agreement
(exhibit “1”); thus making the
payment obligation of the
Plaintiff towards its Lessor to
be the equivalent of $20,000.
Whilst the Plaintiff was making
demands on the Defendant to pay
the balance of $25,000 in order
to pay its Lessor the balance on
his rent, the Defendant refused
and instead agreed with Louis
Casely-Hayford to enter into a
fresh agreement, thereby
abrogating the Agreement between
the parties.
Defendant, on the other hand, is
contending that the Agreement
between the parties (exhibit
“A”) was to take effect from 1st
June 2008 and that vacant
possession of the property was
to be given to the Defendant on
1st June, 2008. The
Plaintiff failed to vacate the
premises on the 1st
of June 2008 even though it had
received a part-payment of
$35,000.00 in advance. The
Defendant contends that the
Plaintiff entered into the Lease
Agreement with it as though it
was the owner of the premises
and that it was later that the
Defendant realised that the
Plaintiff did not have a valid
subsisting tenancy with the
Lessor before entering into an
agreement with the Defendant.
Furthermore, the Lease Agreement
between the Plaintiff and the
Lessor was abrogated and since
the Defendant required the
premises for its business it
negotiated and entered into a
new Lease Agreement with the
Lessor before vacant possession
was given to the Defendant as
the keys to the property were
with the Lessor.
The Defendant has consequently
counterclaimed against the
Plaintiff for the following:
1.
The
refund of the rent advance of
Twenty Five Thousand US
Dollars (US$25,000.00) paid by
the Defendant to the Plaintiff.
2.
Interest at the prevailing
commercial bank rate from 1st
June, 2008 to date of final
payment.
3.
Solicitor’s Cost.
The issues set down for
determination are as follows:
1. Whether or not the
purported abrogation of the
agreement by the defendant is
lawful.
2. Whether or not the
plaintiff has misrepresented
itself to the defendant as the
Head-Lessor.
3. Whether or not the
plaintiff let the premises to
the defendant with the consent
and knowledge of the
Head-Lessor.
4. Whether or not the
description of the agreement as
a “Lease” operates to invalidate
the entire agreement between the
parties.
5. Whether or not the
Head-Lessor had forfeited the
tenancy agreement between the
plaintiff and the Head-Lessor
and if so whether the forfeiture
is lawful.
6. Whether or no the
defendant is in breach of the
agreement it entered with the
plaintiff.
It is my view that the main
issue for determination is
whether or not the Defendant is
in breach of the Lease Agreement
with the Plaintiff. In my
opinion, the issue as to whether
or not the description of the
agreement as a lease operates to
invalidate the entire agreement
between the parties is rather
mute by reason of the fact that
Defendant itself concedes by its
pleadings that the agreement
between the parties herein was a
sublease (see paragraph 8 of the
Statement of Defence).
Furthermore, there are several
references to the Plaintiff’s
Landlord/Headlessor in the
Defendant’s pleading. But more
importantly, the evidence placed
before the Court is that
Plaintiff was a Lessee and not
the owner of the property, and
that he did obtain the consent
of the Lessor, Mr.
Casely-Hayford to sublet the
property in question. Mr.
Casely-Hayford (D.W.2) himself
testified, and his evidence was
that he gave Plaintiff his
consent to let the property in
question to the Defendant.
It is trite law that the Court,
in giving effect to a document
embodying the agreement of
parties, will look at the
substance and the intention of
the parties in order to arrive
at the effect of the document,
and a mere mis-description of a
document will not obliterate
this intention. Thus, Lord
Denning, in distinguishing the
difference between a “lease” and
a “licence” had this to say in
the case of Errington v.
Errington and Woods (1952) 1 KB
290:
“Words alone may not suffice.
Parties cannot turn a tenancy
into a license merely by calling
it one. But if the
circumstances and the conduct of
the parties show that all that
was intended was that the
occupier should be granted a
personal privilege, with no
interest in the land, he will be
held to be a licensee only”.
Again, the English Court of
Appeal, in the case of
Prudential Assurance v. London
Residuary Body (1952) 2 WLR 279,
stated that:
“If an agreement satisfies all
the requirements of a tenancy,
then the agreement produces a
tenancy and the parties cannot
alter the effect of the
agreement by insisting that they
only created a license. The
manufacturer of a five pronged
instrument for digging results
in a fork even if the
manufacturer, unfamiliar with
the English language, insists
that he intended to make and has
made a spade”.
In Ghana, the decision of the
Supreme Court in the case of
P. Y. Atta & Sons Ltd. v.
Kingsman Enterprises Ltd
(2007-08) 2 SCGLR, 946
settles the issue. In this
case, the Supreme Court was
invited to determine whether an
agreement entered into by the
parties was an “Assignment”
disposing of the “Assignor’s”
whole interest in the property
of a “Sublease”. And the
Supreme Court held, among
others, in holding (2) that:
“In considering every agreement,
the paramount consideration was
that the parties themselves
intended or desired to be
contained in the agreement. The
intentions should prevail at all
times. The general rule was
that a document should be given
its ordinary meaning if the
terms used therein were clear
and unambiguous. In conflicting
situations like those in the
instant case, the process of
determining the intentions of
the parties should be
objective. Objective approach
in that context implied the
meaning that the words in the
document would convey to a
reasonable person seized with
the facts of the case. In such
exercise, the entire document,
the effect it had on the
interpretation would mandate
that the document should be
interpreted in a view that would
cause the intention of the
parties to prevail”.
In any case, the Court has the
power to order that the document
be amended to reflect what the
parties by their agreement,
intended to convey, as the court
did in the case of Milmor v.
Carreras (1946) KB 306,
cited and distinguished in P.
Y. Atta & Sons (supra). I
will accordingly, order that the
Agreement (Exhibit “A”) be
amended to read a “Sublease”.
So, back to the issue to be
determined; i.e. is the
Defendant in the instant case in
breach of the Lease Agreement it
entered into with the
Plaintiff? The evidence adduced
on behalf of Plaintiff, who is
alleging so, was that Defendant
breached the Agreement it
entered into with the Plaintiff
by paying only $35,000.00
instead of the amount of
$60,000.00 payable on the date
of the execution of the
Agreement. Defendant is
disputing this claim.
I will consider this issue by
looking at the various
agreements entered into in the
whole transaction. The first
agreement I will examine is the
Lease Agreement between Mr.
Louis Casely-Hayford (D.W. 2)
and the Plaintiff, tendered in
evidence as Exhibit “B”. This
is the Agreement that covered
the lease of the first (upper)
floor of the property in
question by Plaintiff herein,
and which expired on 1st
June 2008. D.W.2 tendered in
evidence a Lease Agreement
(Exhibit “1”) which purportedly
renewed the lease covered by
Exhibit “B”, and which included
the lower floor of the property
in question. Exhibit “1” also
was for an initial period of two
(two) years commencing from 1st
June 2008. Plaintiff was to pay
an annual rent of €25,800
(equivalent to $40,000.00) which
was to be paid every six (6)
months in advance.
The Agreement between the
parties herein (Exhibit “A”) was
also for an initial period of
two (2) years commencing from 1st
June 2008. The evidence of both
D.W. 1 ( Charles Owusu Juana,
Chairman of Defendant Law Firm),
and D.W. 2, ( Louis
Casely-Hayford) was that the
Defendant did not pay the six
months rent in advance as agreed
in Exhibit “1”. PW 1, (Collin
Alexander Charles, Managing
Director of Plaintiff Company)
however testified that he could
not make the total agreed
advance payment of $20,000.00 to
the Head Lessor (D.W.2) because
Defendant did not pay the total
rent advance of $60,000 to
Plaintiff as agreed. His
evidence was that Mr.
Casely-Hayford consented to
Plaintiff sub-letting both top
and bottom floors, and even
though P.W.1 could not provide
the written consent in Court, he
tendered in evidence emails
(Exhibits “C” and “D”) in which
the matter was discussed. This
piece of evidence was
corroborated by Mr.
Casely-Hayford.
P.W.1’s further evidence was
that by virtue of Exhibit “D”
Mr. Casely-Hayford was aware of
the fact that he was waiting for
the payment by Defendant to
enable him also pay Mr.
Casely-Hayford what was due to
him. My difficulty with the
Plaintiff’s position is that the
evidence placed before the Court
was that P.W.1 was paid an
initial amount of $30,000 by the
Defendant, presumably to enable
him pay the Head Lessor and also
to renovate the property. After
paying an amount less than
$10,000.00 to the Head lessor,
the uncontroverted evidence of
D.W.1 was that P.W.1 came back
to Defendant to ask for more
money. Defendant paid an
additional amount of $5,000.00
to Plaintiff to enable him
complete the renovation work.
The question is what happened to
the balance of $20,000 remaining
from the initial amount of
$30,000.00 paid to Plaintiff? In
any case, the two agreements,
Exhibits “A” and “1”, are two
separate and distinct agreements
and are not linked in any way
for the Plaintiff to claim that
non payment of the agreed amount
under Exhibit “A” disabled him
from fulfilling his obligations
under Exhibit “1”. There is no
term in Exhibit “1” to indicate
that payment of the agreed rent
therein was dependant on the
payment of rent under Exhibit
“A”.
I shall now examine the terms
and conditions of Exhibit “A”.
The Defendant agreed to pay the
rent upon signing the said
Agreement. However, the evidence
of D.W.1, which evidence stands
uncontroverted, was that
Plaintiff was not ready to leave
the property when they signed
the Agreement. They agreed to
give him an additional
forty-five days to enable him
complete the renovations and
give Defendant vacant
possession. For this reason,
Defendant decided to pay half of
the agreed advance payment
instead of the full amount to
Plaintiff; i.e. $30,000.00.
P.W.1, according to D.W.1, came
back to Defendant to plead with
them for additional payment, but
after visiting the property
D.W.1 realised that P.W.1 had
not done the renovation that was
agreed, and therefore Defendant
gave P.W.1 only $5,000.00 in
addition rather than the whole
outstanding balance. After the
expiration of the 45 days, when
Defendant’s officials inspected
the property, Plaintiff had
still not completed the
renovations.
It appears to me that the
testimony of D.W.1 constitutes a
slight variation to the Lease
Agreement (Exhibit “A”); i.e.
that the Defendant gave
Plaintiff an extra 45 days to
complete the renovation work
before making the full payment,
even though the Agreement had
already been signed. This was a
variation of the term with
regards to commencement of the
Agreement. It is trite learning
that a lease is a contract
between the lessor or landlord
and the lessee or tenant whereby
the lease is granted exclusive
possession of land for a fixed
period upon terms and conditions
agreed upon between the parties.
Like any other contract a lease
should embody all the material
terms and conditions which the
parties intend to be binding on
them. The rule of contract that
the parties must be in complete
agreement on all material terms
applies to a lease. Nothing must
be left in doubt and nothing
should be left to implication
except such as the law allows.
Where parties appear to have
embodied their agreement in a
written document, the question
arises whether extrinsic
evidence, that is to say,
evidence of matters outside the
document, is admissible so as to
affect its content. It is often
said to be a rule of law that
“if there be a contract which
has been reduced to writing,
verbal evidence is not allowed
to be given.....so as to add to
or subtract from, or in any
manner to vary or qualify the
written contract.” (Goss v
Lord Nugent [1833] 5 B & Ad 58,
64). Needless to say, this
rule is usually known as the
“parol evidence” rule. However,
the parol evidence rule is and
has long been subject to a
number of exceptions. In
particular, since the 19th
century, the courts have been
prepared to admit extrinsic
evidence of terms additional to
those contained in the written
document if it is shown that the
document was not intended to
express the entire agreement
between the parties.
It follows that the scope of the
parol evidence rule is much
narrower than at first sight
appears. It has no application
until it is first determined
that the terms of the parties’
agreement are wholly contained
in the written document. The
rule “only appears where the
parties to an agreement reduce
it to writing, and agree or
intend that the writing shall be
their agreement.” (Harris v
Rickett [1859] 4 H & N. 1, 7.).
Whether the parties did so agree
or intend is a matter to be
decided by the court upon
consideration of all the
evidence relevant to this issue.
However certain contracts are
required by law to be in
writing. The effect of this
requirement will be to exclude
oral evidence which is offered
for no other purpose than to
contradict, vary, add to or
subtract from the contract as
contained in writing. The law in
Ghana, Conveyancing Act, 1973
(N.R.C.D. 175), requires that a
lease must be in writing and
thus no oral evidence can be led
to vary the terms.
I will therefore find that the
evidence of D.W.1 cannot be
accepted to vary Exhibit “A”.
The Defendant ought to have paid
an amount of $60,000.00 upon
signing the agreement, but
Defendant paid only $30,000.00.
So, can one rely on this fact to
conclude that Defendant was in
breach of Exhibit “A”?
By virtue of sections 22 and 23
of the Conveyancing Act there
are certain implied covenants in
any conveyance of property for
valuable consideration,
including the covenant to pay
rent. By this, there is a
covenant to pay rent reserved at
the times and in the manner
specified in the lease (S.23.1).
Even though instruments dealing
with the disposition of land or
interests in land in Ghana now
need not be under seal,
covenants contained in such
instruments are however binding.
A covenant is first and foremost
contractual. It is always
enforceable according to its
terms between the original
parties i.e. the covenantor, who
makes the promise and the
covenantee to whom the promise
is made. And when there is a
breach of the contract, the
aggrieved party may obtain the
usual remedies for breach of
contract. This means that as
between the original covenantor
and the covenantee, the covenant
is enforceable by reason of
their privity of contract.
Before I come to any conclusion
with regard to the alleged
breach committed against
Plaintiff by Defendant however,
I want to conclude the
discussion on the Agreement
between Plaintiff and Mr.
Casely-Hayford; the Headlease.
From the totality of the
evidence adduced, the original
Lease, Exhibit “B” had expired
and Plaintiff did not make the
renewed Lease (Exhibit “1”)
effective by failing as a result
of his failure to pay rent. In
my opinion, the Lease Agreement
between Plaintiff and Mr.
Casely-Hayford had terminated by
expiry. If a lease or tenancy is
for a fixed term, then it is at
common law automatically
terminated at the end of the
period. A lease may also come to
an end if it is by an express
provision of the lease, made
determinable upon the occurrence
of some event.
The effect of the expiration of
a lease is that the tenant
ceases to be entitled to
possession and the landlord
becomes entitled to take
possession of the property. In
the lease of a house, the
landlord’s right to recover
possession of the property is,
however, limited by statute.
Under the Rent Act, 1963 (Act
220), a tenant becomes a
“statutory tenant” if he
“remains in possession of
premises after the
determination by any means
of his tenancy and cannot by
reason of the provisions of this
Act, be deprived of such
possession by the landlord”;
section 36 of Act 220.
In effect a landlord cannot
automatically regain possession
of the premises after the
expiration of a tenancy unless
the tenant voluntarily gives up
possession. If the tenant stays
on and becomes a “statutory
tenant”, then the landlord can
eject him only by order of the
Court. In the instant case, the
Lessee, Plaintiff herein, was
not in possession of the
property in question since the
keys were with the Lessor (Mr.
Casely-Hayford).
In my opinion, the issue of
forfeiture of the lease/tenancy
as pertains under the
Conveyancing Act does not apply
here, and I will so find. A
landlord may become entitled to
forfeit the tenancy while the
lease/tenancy is still
subsisting. Forfeiture
prematurely terminates the
tenancy before the expiration of
the period created. In the
instant case, the tenancy/lease
had expired.
I will thus find that Mr.
Casely-Hayford was entitled to
take possession of the property
in question, which he did and
took a decision to deal directly
with Defendant. The evidence of
D.W.1 was that Mr.
Casely-Hayford had the keys to
the property which he gave to
Defendant after the two entered
into a Lease Agreement. In the
circumstances, Plaintiff did not
have any Lease to sublease to
Defendant; you cannot give what
you do not have!
Can we therefore say that the
Defendant breached any sublease,
even though the Defendant had
not paid the full amount of
$60,000.00 upon signing of the
Agreement (Exhibit “A”)? I would
say not because Defendant was to
be given possession upon the
signing of Exhibit “A”, and will
so find. In the circumstances,
I will find that Defendant is
entitled to recover whatever it
paid in advance to Plaintiff,
with interest.
In conclusion therefore, I find
that there was no valid lease
between the Plaintiff and its
Lessor, Mr. Casely-Hayford, as
at 12th June, 2008
and therefore the Agreement
between Plaintiff and Defendant
(Exhibit “A”) dated 12th
June, 2008, could not operate to
transfer Plaintiff’s purported
interest in the property in
question. I will therefore find
that Plaintiff is not entitled
to payment of the outstanding
balance on the agreed rent, and
I will so hold. I will
therefore dismiss all of the
Plaintiff’s claims.
As already indicated, Defendant
has also counterclaimed for a
refund of an amount of
$25,000.00 paid as rent advance
to the Plaintiff, together with
interest. I have earlier stated
that by law there are some
implied covenants that the
transferor has to comply with.
They are the right to convey;
quiet enjoyment; freedom from
encumbrances; and further
assurance. The right to convey
means that the transferor has
the full power and the right to
convey the whole property and
the interest he is transferring;
Eastwood v Ashton [1915] A.C.
900.
It is implied that the
transferee will be given vacant
possession. Quiet enjoyment
presupposes the grant of vacant
possession by the transferor at
the date of
commencement/execution of the
lease. Possession can be actual
or constructive, thus a
lessee/tenant is entitled to
either have physical possession
or be enabled to have vacant
possession, by for instance
giving the keys to the premises
or by giving unfettered access
to the property. In the instant
case, Plaintiff did not give
Defendant vacant possession;
indeed, it could not give
Defendant vacant possession
because apart from the fact that
Plaintiff was still occupying
the premises at the time of the
signing of the Agreement
(Exhibit “A”), the Lease with
Mr. Casely-Hayford had expired.
The evidence placed before the
Court is that Mr. Casely-Hayford
had the keys to the property.
In the circumstances of the
case, I will hold that Defendant
is entitled to his counterclaim
since I have found that it is
rather Plaintiff which breached
the Agreement between the
parties by not giving Defendant
vacant possession. I will
therefore order that Plaintiff
refunds the amount of $25,000.00
to Defendant, together with
interest at the prevailing
commercial bank interest until
date of final payment.
Costs assessed at GH¢2,000.00
against Plaintiff.
(SGD)
BARBARA
ACKAH-YENSU (J)
JUSTICE OF
THE HIGH COURT
COUNSEL
SAMANI MOHAMMED
- PLAINTIFF
CHARLES PUOZUING
- DEFENDANT |
