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JUDGMENT

DR. SETH TWUM, JSC:

On 17th February 1999 The Plaintiff/Respondent (hereafter called "the Respondents") issued a Writ of summons accompanied by a statement of claim in the High Court Accra, against the Defendants/Appellants. In the course of the trial, the Respondents wholly discontinued their action against the 2nd Defendant, namely GLAHCO HOTELS & TOURISM DEVELOPMENT CO. LTD. and its name was struck out from the suit, leaving SKANSKA JENSEN INTERNATIONAL (hereinafter "the Appellants")

The Writ of Summons was indorsed with the following reliefs:—

(1) Payment of the sum of USD 224,533.29 or its cedi equivalent at the current Forex Bureau rate of exchange at the date of payment being the Plaintiff's bill for the supply of equipment and materials and engineering services for HVAC works executed by the Plaintiff at the New Executive Guest Rooms Wing of Golden Tulip Hotel at the request of the 1st Defendant as the main Contractors for itself and on behalf of the 2nd Defendant as the contract owners from December, 1996 to March 1997 and which bill the defendants have failed or refused to pay despite persistent demands up to this day.

(ii) Interest on the said USD 224,533.29 from 15th April, 1997 up to the date of final payment at the current bank rate.

(iii) Damages for breach of contract.

(iv) Any other relief found due.

Statement of Claim

This contained 22 paragraphs. For the purpose of this appeal we set out below the most important paragraphs.

4. In the latter part of 1996, the 1st Defendant, as the main contractor, for itself and on behalf of the 2nd Defendant, as the contract owner, invited the Plaintiff to undertake the HVAC works (ie. to supply engineering and installation of air-conditioning system) for the 2nd Defendant's New Executive Guest Room Wing of the Golden Tulip Hotel.

5. Pursuant thereto the Plaintiff per its Managing Director, Mr. George Zoudros, on the one hand, and the 1st Defendant's Manager, Mr. Chris D. Kragh, on the other hand executed documents on 23rd December 1996, containing the main terms of the agreement reached between the parties.

6. On the same date (23rd December 1996) the parties discussed and initialled in draft form a detailed sub-contract document which the parties mutually intended to govern the execution of the HVAC sub-contract. It was further mutually agreed that the formal sub-contract agreement based on the draft would be drawn up by the 1st Defendant for execution by the parties.

7. Due to differences subsequently arising between the parties, the formal agreement was never finalised and executed and therefore never became effective between the parties.

10. Despite the non-preparation and non-execution of the formal contract agreement, the Plaintiff nevertheless proceeded to utilize its own resources in executing the HVAC works which it had in fact already commenced under pressure from the 1st Defendant from 1st December 1996, to the best of its abilities. By a letter dated 3rd April 1997 the 1st Defendant without any lawful excuse or justification whatsoever terminated the Plaintiffs HVAC subcontract upon the sole ground that the Plaintiff had failed to furnish the 1st Defendant with a Performance Guarantee.

16. The Plaintiff says that having performed over 90% of the HVAC contract works as at the date of the said unlawful termination, it is entitled to its full value of the agreed contract price thus so far performed ie. USD 224,533.29 for the Supply of Equipment and Materials and Engineering and other works executed, and the Plaintiff duly billed the Defendant.

17. Further or in the alternative, the Plaintiff says that at the stage of the unlawful termination, it became entitled forthwith to the payment of the value of services thus far rendered on the quantum. Despite this the Defendant has wrongfully failed or refused to pay the Plaintiff's initial bill for the Supply of Equipment and Materials and Engineering services thus far rendered to Defendant in the sum of USD 224,533.29.

Statement of Defence

Similarly, we reproduce important paragraphs only.

1. The 1st Defendant admits paragraphs 1,2,3 and 4 of the statement of claim.

3. Save that the said draft agreement was subsequently varied, paragraph 6 is admitted.

4. in answer to paragraph 7, the 1st Defendant admits that the formal agreement was never finalised and executed but insists that the draft sub-contract referred to in paragraph (2) of this statement of defence as subsequently varied constituted an effective and binding agreement between the parties.

10. In further answer to paragraph 12, the 1st Defendant says that the provision of performance guarantee/bond was a condition precedent of the agreement and that failure to provide it constituted a fundamental breach of the terms of the agreement.

13. The 1st defendant denies that the Plaintiff had completed more than 90% of the works under the HVAC sub-contract and contends that apart from the preliminary drawing and listing of sources of purchase of equipment for which payment was made by the Defendant, the Plaintiff did not even start the work.

Counterclaim

18. As result of the breach of contract by the Respondent the Appellant claimed it was forced to complete the HVAC works itself at an extra cost of USD 245,600.00 and counter claimed for it.

Summons for Directions

In all, a total of some 21 issues were raised by all the parties. The trial High Court judge made an order that "the issues filed by the Plaintiff and the additional issues to be issues set down for trial". We do not propose to indulge in the luxury of setting out those 21 or so issues since they are not really critical for the purpose of disposing of the appeal.

The Facts

The Appellant who carries on business in Ghana as civil engineers had secured a contract from Glahco Hotels & Tourism Development Co. Ltd, owners of the Golden Tulip Hotel, to do civil engineering works in the new Executive Wing of the hotel. Their contract permitted subcontracting. The Respondents are renowned refrigeration engineers. They are based in Cyprus. The Appellants invited them to be Sub-Contractors, for the supply, engineering and installation of a Heating Ventilation and Air-Conditioning System (HVAC) in the Executive Wing of the Hotel.

Between May and November 1996, discussions took place between the Appellants and the Respondents about the subcontract, but nothing concrete materialised from those discussions. The Appellants themselves signed their agreement with Glahco Hotels, etc, in September 1996. According to the Respondents, the Appellants warned them in November 1996 not to expect any sub-contract. However, on or about the 26th of November 1996 the Appellants informed the Respondents that the sub-contract was available and that if they were still interested they should come down to start the job immediately. This urgency was probably due to the fact that according to the Appellants their own contract with the owners required them to have an air-conditioning engineer on the site by October 1996. The Respondents replied, accepting the offer, and prepared feverishly to move to the site. The Respondents' Managing Director testified that he came to Ghana on 7th December 1996, expecting to sign a sub-contract but the Appellants contract Manager was busy and did not have time to go through the details of the sub-contract with him. Between 19th and 21st December 1996, the Respondents held discussions with the Appellants on the terms of the subcontract and on 23rd December 1996, minutes of their meeting were signed. The minutes were tendered in evidence as Exhibit G. It contained the main terms of their contract. The parties further considered a draft sub-contract. It was a standard form contract used in the building industry. They made several changes there-to, by way of additions, outright cancellations or substitution.

The draft sub-contract was tendered in evidence as Exhibit H. In this case, the parties merely initialled each page and each addition, cancellation or other amendment. In particular, even though page 25 was printed with the usual concluding words: "IN WITNESS whereof the parties hereto etc.." and spaces were provided for their signatures, the parties did not sign it. Paragraph 9 of Exhibit G explained that they agreed that "the subcontract will be prepared and signed as per attached draft". From the Respondents' evidence, they expected that the sub-contract would be prepared and made ready for signature soon thereafter. But that did not happen. The Appellants' representative who was to prepare it became somehow inaccessible to the Respondents. When eventually he surfaced, he promised the Respondents that he would have the subcontract ready for signature by the end of January 1997. Later, he informed the Respondents that a director of the Appellants' was coming into the country and, he the director, would like to discuss the terms of the sub-contract with the Respondents' representative. A meeting actually took place on 27th January 1997 between the Appellants' said director and the Respondents' Managing Director. According to the Respondents, this meeting confirmed the main issues of the contract. On 19th March 1997 three documents were submitted to the Respondents. These were tendered as Exhibits K, K1 and K2. Exhibit K was a letter which explained what was involved in having the draft subcontract prepared. K1 was the new subcontract and K2 was "Bill of Quantities." Meanwhile the Respondents were carrying out the HVAC works in the hotel.

The Respondents were unhappy about a number of important matters which had been discussed and agreed upon but had been left out. They did not take this new development lying down and wrote a letter dated 20th March 1997 to the Appellants objecting to the unauthorised deletions from the subcontract and demanding that the terms as agreed between them be reinstated in it. A copy of this letter was tendered as Exhibit "L". The record does not show that exhibit L evoked any response from the Appellants. On 3rd April 1997 the Respondents wrote a further letter to the Appellants - Exhibit "M" in which they gave a summary of the HVAC works they had executed on the West Wing between 3rd December 1996 and 25th March 1997. On the same 3rd April 1997 the Appellants sent a letter to the Respondents terminating the Respondents' employment because according to them, the Respondents had failed to provide the performance guarantee mentioned in Exhibit H. This letter was tendered as Exhibit S.

Judgments of the Courts below:

High Court: After an extensive review of the evidence, the learned High Court judge gave judgment on 9th November 1999. She found as a fact that the only binding contract between the Appellant and the Respondent was contained in the minutes of the meeting held by them on 23rd December 1996, Exhibit G. This she found, the Respondents had partly performed. She also found that the draft subcontract Exhibit H was not a binding contract between the parties. The Appellants therefore could not rely on any part of that document to terminate the contract. She said the provision of a performance bond was not a condition in the minutes of the meeting of 23 December 1996. Consequently, the termination of the Respondents' contract on that ground was unlawful. She dismissed the 1st Appellants' counterclaim as a "sham" and then proceeded to consider what relief was available to the Respondents. She said the Respondents' alternative claim was based on "quantum meruit, i.e, it was claiming the sum of USD 224,533.29 as a reasonable remuneration for the services rendered". She upheld the Respondents' said claim and entered judgment for them in the sum of USD 224533.29 or its equivalent in cedis at the Forex Bureau rate of exchange at the date of payment.

Court of Appeal

On 9th November 1999 the Appellants appealed against the judgment of the High Court to the Court of Appeal. The ground of appeal particularised in the Notice of Appeal was the omnibus ground -"that the judgment was against the weight of evidence adduced at the trial". On 15th January 2001, the Appellants filed the following Additional Grounds of Appeal.

(a) That the learned Trial Judge erred by ignoring the assessment of quantum by the independent consultant to the project and granted the relief as set out in the claim for breach of contract by the Plaintiff as "liquidated."

(b) That the learned Trial Judge erred by dismissing the application of the Defendant/Appellant invoking the Arbitration clause in the contract and thereby ousting the jurisdiction of the court.

(c)  The learned Trial Judge wrongly assumed jurisdiction in the case.

(d) That the award in dollars in a quantum meruit matter is wrong as the dollar is not legal tender in Ghana.

On the 20th December 2001 the Court of Appeal gave judgment. It found that the learned trial judge was justified in dismissing the Appellants' counterclaim which she had described as a "sham" It further upheld the Respondents' claim in quantum meruit for the sum of USD 224,533.29 or its equivalent in cedis at the Forex Bureau rate of exchange at the time of payment. In the result the Court dismissed the Appellants' appeal. In view of the fact that the Respondents' claim was in foreign exchange, the court ordered that the rate of interest should rather be based on the prevailing dollar rate at the material time.

In this Court

On the same day that the Court of Appeal gave its judgment (i.e. 20 December 2001) the Appellants appealed to this court. Five grounds of appeal were particularised in the Notice of Appeal. These were:-

(a)  The judgment is against the weight of evidence on record.

(b) The Learned Justices of Appeal erred in holding that the only valid contract between the Appellant and the Respondent is Exhibit "G", thereby separating Exhibit "H" from Exhibit G

(c) The Learned Justices of Appeal did not consider the principles governing quantum meruit and did not apply the said principles of reasonable quantum independently assessed.

(d)  The Learned Justices of Appeal erred in ignoring the assessment of quantum meruit by the independent consultant to the project and affirmed the decision of the High Court of Justice granting the Respondent's claim for breach of contract as liquidated claim.

(e)  The Learned Justices of Appeal failed to consider the effect of the arbitration clause on the action of the Respondents.

We propose to tackle ground (e) first, because if indeed the matter ought to have been referred to arbitration, then this court must consider whether even at this late stage, the reference ought to be made.

Ground (e)

"The Learned Justices of Appeal failed to consider the effect of the arbitration clause on the action of the Respondents"

In his statement of case and also at the hearing of the appeal, learned counsel for the Appellants, Mr Amarkai Amarteifio, submitted that the issue of "quantum meruit" should be referred to arbitration as contained in clause 24 of the draft sub-contract. He said the learned trial judge wrongly failed to refer the entire dispute to arbitration. With all respect to learned counsel it is our opinion that his strictures against the learned trial judge are wholly misplaced. On 19th July 1999, he filed a "Notice of Amendment" by which he sought to amend his statement of Defence. That Notice did not specify in what manner the statement of defence was being amended. It merely stated: "6.a. It was an express term of the draft subcontract that any dispute existing between the parties be referred to arbitration and as such this action contravenes a fundamental term of the agreement." On that same day learned counsel filed "Additional issues for the Summons for Directions". Issue (e) was "whether under the said agreement a dispute between the parties should be referred to Arbitration". The Summons for Direction was taken on 26th July 1999 and the court ordered that "the issues filed by the Plaintiff and the additional issues be the issues set down for trial". Obviously then, additional issue (e) would be resolved after the trial. That notwithstanding, on 2nd May 2000, learned counsel for the Appellants filed a "Notice of Intention to Raise Legal Points for Determination under the Inherent Jurisdiction of the court and Order 25". The Notice was to the effect that at the hearing of "this Summons...... counsel ......... shall raise the following Legal points for determination by the court". Incidentally, no summons had been filed. The fourth legal point set down in the Notice was "whether or not the agreement provided for recourse to an arbitration in relation to termination before taking any further step". We believe that what learned counsel really wanted was an order staying the Respondents' court action in the High Court so that the dispute might go to arbitration. Unfortunately, none of the flurry of activity on the part of learned counsel could produce that result.

Section 8 of our Arbitration Act 1961 (Act 38) provides: "if any party to an arbitration agreement or any person claiming through him, commences any legal proceedings in any court against any other party to the agreement or any person claiming through him in respect of any matter agreed to be referred, any party to these legal proceedings may apply to that court to stay the proceedings and that court, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the agreement, and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings"

The section requires that an application must be made to the court specifically praying for an order that the proceedings be stayed. The application must be by motion, supported by an affidavit setting out the facts upon which the applicant relies. The other party may file an affidavit in opposition to the motion. The court has a discretion whether or not to grant a stay of the proceedings. In De Graft-Johnson and Anor v. Ghana Bank and Anor (1973) 2 GLR 100, Aboagye J. held that the court has a discretion to grant or refuse a stay and that generally the court would not grant a stay of proceedings if the matter in dispute involved difficult questions of law or if the matter was more convenient and suitable for determination by the court rather than an arbitrator who might have to state a case for the decision of the court, and in Kusi v. Shell Company of Ghana Ltd (1973) 1 GLR 173, the Court of Appeal pointed out that since there was no formal application for a stay of proceedings before the trial judge he was justified in refusing the request for arbitration. In the circumstances as learned counsel for the Appellant made no application for stay of proceedings, the learned High Court judge could not have made an order suo motu. As a matter of practice the application would be made under section 8 of the Arbitration Act 1961 (Act 38) and order 72 rule 1 of the High Court (Civil Procedure) Rules 1954, (LN 140A). Now under order 72 rule 2, no application to set aside any proceedings for irregularity shall be allowed unless made within a reasonable time, nor if the party applying has taken any fresh step after knowledge of the irregularity. The Appellants, with full knowledge of the alleged wrongful commencement of the action in the court by the Respondents, proceeded to file all those processes, enumerated above, including the filing of even a statement of defence and counter claim. They effectively waived any right they had for applying to stay the proceedings. There is also the procedure laid down in the alleged agreement, which ought to have been complied with by the Appellants. Assuming without ruling on it at this stage, that Exhibit H was a binding agreement between the parties, clause 24 required the party who wishes to go to arbitration to take a number of important steps to activate the arbitration process, not least, the service of the Notice of Dispute. There is no evidence that the Appellants did anything pursuant to clause 24.

Clearly then, ground (e) of the grounds of appeal is unmeritorious and the same is accordingly dismissed.

Should this court, now refer the matter to arbitration? As we have pointed out above, the right to go to arbitration is vested in the parties. Our Arbitration Act 1961 (Act 38) contains no provision which empowers the court to refer matters to arbitration when there is no valid request from a party to the arbitration agreement. When counsel for the Appellants suggested to us in argument that the matter should be referred to arbitration, he did not cite any authority in support. It is our opinion that this court has no power to refer to arbitration this litigation which, by the clear choice of the parties, has travelled all the way from the High Court through the Court of Appeal, to it. And even if we had power, it is clear that the Appellant had not satisfied the mandatory provisions of clause 24. The invitation to us to refer the matter to arbitration is accordingly declined as unwarranted by any rule of law or of practice or procedure.

Grounds (a) and (b)

(a) "The judgment is against the weight of evidence on the record".

(b) "The Learned Justices of Appeal erred in holding that the only valid contract between the Appellant and the Respondent is Exhibit G; thereby separating Exhibit H from G".

We believe that these two grounds of appeal may profitably be dealt with together. That is how learned counsel for the Appellants dealt with them in the statement of case for the Appellants. After all, the major controversy was whether or not the courts below were right in rejecting Exhibit H as a binding agreement between the parties. In other words, that holding was against the weight of the evidence on the record. At page 6 of the statement of case, learned counsel referred to the last sentence of Exhibit G which he quoted as follows: "The subcontract will be presented and signed as per attached draft." That is a misquotation. The sentence used the word" prepared" not "presented". Learned counsel complained that the courts below found that Exhibit H was not a binding contract and thereby separated it from Exhibit G. With all respect, Exhibit G was the minutes of a meeting held on 23rd December 1996. Exhibit H was a standard form contract used in the building industry which was provided by the Appellants to be adapted for use in the preparation of the sub-contract between the parties. This was referred to as the "draft" in paragraph 9 of Exhibit G. If the court found that Exhibit H was not a binding agreement, it did not necessarily also invalidate Exhibit G, the minutes of 23d December 1996. In those circumstances, the two documents would be separated.

Learned Counsel's position nonetheless was that the draft was authenticated by the initials of the parties' representatives. Consequently it was the binding sub-contract between the parties. Before we decide this let us consider one related matter. If Exhibit H was a binding agreement as argued by learned counsel for the Appellants, did the parties intend that Exhibit H should come into effect on 23rd December 1996? If not, why not? After all, according to learned counsel for the Appellants, there was nothing left to be done. Every page had been initialled by the parties. And all the terms had been agreed upon. If it was not intended to come into effect on that day, then when did it come into effect?

One other important issue. Paragraph 9 of Exhibit G provided that "the subcontract will be prepared and signed as per attached draft". Did the parties attach any importance to paragraph 9 of Exhibit G? Not unnaturally, either party construed paragraph 9 differently, and of course, arrived at different destinations. What were the rival arguments? Learned Counsel for the Appellant argued that Exhibit H was the only binding agreement between the parties and must be applied by the court, we think that argument is over-enthusiastically put. Indeed, that argument begs the question because the pith of the problem is whether Exhibit H is a binding agreement. Further, it cannot be denied that Exhibit G contained some of the terms by which the relationship between parties was to be governed. If learned counsel means that exhibit G was encapsulated in Exhibit H, it was paragraph 9, that said so. Of course, if we are persuaded that Exhibit G was irrelevant, then paragraph 9 would be otiose.

Learned Counsel for the Respondents, for his part, strongly urged this court to hold that Exhibit H was not a binding contract because the Appellants' representative who had undertaken to have the sub-contract prepared from Exhibit H failed to do so. That much is partly true, but in our view, that failure, ipso facto, would not necessarily make Exhibit H not binding on the parties if "to prepare" in this context simply means to retype with all the amendments handwritten by the Appellants' representative. Learned Counsel further argued that instead of preparing the subcontract from the draft (exhibit H), the representative rather unilaterally removed some of the matters agreed upon at the meeting of 23rd December 1996 and added others not discussed at all. Again if this was the only problem, the answer would be to ignore the unauthorised changes and construe the draft (ie Exhibit H), again applying the meaning we have suggested above for "prepare". So what was the intention of the parties vis-a-vis paragraph 9 of Exhibit G? Was it really true that on 23rd December 1996 the parties settled all the terms of the sub-contract? The evidence is overwhelming that they did not. The way the Appellants treated Exhibit H was decisive of that intention. Their conduct persuades us that when Exhibit G, paragraph 9, used the words "to prepare", it meant "to bring into existence a sub-contract from the draft Exhibit H", not merely to have Exhibit H retyped to produce a fair copy. Here are our reasons. First, there is evidence on record that even after Exhibit H had been initialled on 23rd December 1996, the Appellants' director requested to revisit it with the Respondents' representative. It was merely fortuitous that they apparently agreed on what had been decided before. As we have pointed out above, the Appellants submitted to the Respondents, Exhibits K, Kl and K2. For a proper understanding of what the Appellants' representative understood the word prepared" to mean, let us quote the substance of Exhibit K. It is a letter from the Appellants to the Respondents. It is dated 19th March 1997.

"For the formalization of our agreement for the subcontract in respect of the HVAC works for the Golden Tulip Project, Please find copy of subcontract agreement prepared from the draft on 23rd December 1996. (Emphasis ours). This is forwarded for your perusal and for signing Friday 21st March 1997. You will notice some amendments are made which are for clarification and for the agreement to be contractually correct. (Emphasis supplied).

Further, you will notice that draft amendment to clause 7.4 © is deleted. The reason for this is that clause 7 describes delays in time only, so deletion does not imply that the subcontractor cannot claim for loss and expenses - this is anyway covered in the subcontract, and the main contract, only he cannot claim for costs with reference to clause 7. Further retention of materials is adjusted to follow the main contract for material on site, anyway the maximum is still 5%.

Bill of Quantities have been worked out to correspond to the contract price. (Emphasis supplied). We expect you will find documents to be in order and look forward to hearing from you."

This letter shows clearly that it was at this stage that the sub-contract can be said to have been prepared. An examination of both exhibits G and H will not reveal any mention of Bill of Quantities (Exhibit K2) which forms a very pivotal part of the subcontract. There are other matters of substance in exhibit K1 which were not in exhibit H. On 20th March 1997, the Respondents sent its comments (Exhibit L) to the Appellants. Exhibit L shows that the parties were clearly not ad idem on very important aspects of the subcontract, (exhibit K1). For example, paragraph 5 pointed out that "in the BOQ'S which were given to us in order to submit our tender, the supply rate and installation rate were included". Then at page 95 of volume 1 of the Record, the Respondents' comments continued thus. "We do not wish to continue with any further analysis, because we think it does require a specialist to review and study it ........" It had taken the Appellants between 23rd December 1996 and 19th March 1997 to have the subcontract prepared even from the draft - exhibit H. It was therefore not unreasonable for the Respondents to have commented that they needed time to study it. In the circumstances, it will be unconscionable to accept the Appellants' argument that on 23rd December 1996 all the terms of the subcontract were agreed upon. That is factually not true. It is also clear that the parties intended their relationship to be governed by exhibits K1, and K2 , not H.

The main contract was incorporated into the subcontract because the subcontractor was a nominated contractor. In accordance with the main contract, the subcontract was made with the contractor, but it contained the contractor's printed terms and conditions. Now, the subcontract, being of the same provenance as the main contract there had to be a symbiotic relationship between them. For example, Exhibit H did not have annexed to it the Bill of Quantities. Exhibit K1 did and Exhibit K explained how the figures in Exhibit K2 were computed; ie. based on the main contract.

It is almost axiomatic that building contractors and subcontractors and architects advising building owners, know far more about the building trade than any judges can hope to do. So, when they have carefully considered a matter and made explicit provision for it we should not over-rule them unless there are compelling reasons for doing so. In their respective statements of case, a lot of space and industry was devoted to that erudite learning applied by the courts to decide when a "subject to contract" stipulation does not mean what it says. That completely obfuscated the search for the intention of the parties when they stated in paragraph 9 of Exhibit G that "the subcontract will be prepared and signed as per attached draft". Generally, the "subject to contract" rules apply to sales of land and leases of land. This is because in land cases, it will be easy to say that all the terms were agreed. All that is required is a sufficient memorandum of the terms in writing. This is satisfied if you have the description of the property, the price and the names and descriptions of the vendor and the purchaser, respectively. In our view, those rules are clearly not suitable to be applied to building contracts.

We do not see anything strange in a subcontractor (director) who does not write English, without legal advice, clearly aware of his comparative disadvantage and wishing to avoid the insidious temptation to improvidence, believing that paragraph 9 of Exhibit G meant what it says. After all, the word "prepare" means "to bring to state of completeness". It seems to us to be putting an undue strain on the words "prepared and signed as per attached draft" to construe them as connoting merely retyping the draft. The evidence is that it took the Appellants' representative between 23rd December 1996 and 19th March 1997 to have the subcontract prepared as per the attached draft. That to us was the true intent of the parties.

The evidence is that exhibit L did not evoke any response from the Appellants. The impasse therefore persisted until 3rd April 1997, when the Appellants purported to terminate the Respondents' contract of employment. We have explained above that exhibit G referred to exhibit H (the draft) but exhibit H was not intended to be the subcontract. That was yet to be prepared. Unfortunately, the first effort to prepare it ended up in a fiasco. The subcontract which contained the clause under which the Appellants purported to terminate the Respondents' employment never came into force. The Appellants could not therefore revert to exhibit H. In the result we hold that the Respondents did the HVAC works under a purported sub-contract that never came into force. That means this court must consider whether or not the Respondents are entitled to be paid anything for the work they did: and if so, how much? Our answer will appear from a consideration of grounds (c) and (d) below.

Ground "(c) The Learned Justices of Appeal did not consider the principles governing quantum meruit and did not apply the said principles of reasonable quantum independently assessed"

"(d) The Learned Justices of Appeal erred in ignoring the assessment of quantum meruit by the independent consultant to the project and affirmed the decision of the High Court of Justice granting the Respondents' claim for breach of contract as liquidated claim"

Ground (c) and (d) really cover the same complaint - how the courts below assessed quantum meruit. In particular, they both criticize the Court of Appeal for not considering the principles of quantum meruit and at any rate for not accepting the assessment of the quantum allegedly made by an independent consultant to the project. It is certainly correct that the Court of Appeal did not consider whether the sum of USD 224,533.29 was reasonable compensation or remuneration for the work done by the Respondents. Counsel's complaint was that the figure was too high. "Reasonable" in this context must mean just right; not too little or too much. The record shows that the Court of Appeal simply indorsed the findings of the trial judge. If it turns out that the trial judge erred then it also erred. But we must also point out that the Court of Appeal did consider the principle of quantum meruit, perhaps a little too briefly. Further, contrary to what learned counsel for the Appellants said, there certainly was no independent consultant to the project who made an assessment of quantum meruit. Mr. Adotey Brown whose firm acted as the principal consultant for building the new Guest Wing of the Golden Tulip Hotel, gave evidence for the Appellants (D.W.1). In his evidence-in-chief he said his firm certified the value of work executed by all the subcontractors as and when they put in claims for payment. He further testified that between April and May there were 2 claims valued between USD 2,800.00 and USD 12,000.00. "This will represent the minimum and maximum work done but this will not include any prefabricated work done outside the site or as materials on site".

We have taken the trouble to reproduce this piece of evidence because learned counsel for the Appellants picked this up and wrongly argued that this witness had estimated that the total value of the work done by the Respondents was no more than USD 12,000.00. As we have pointed out above this was no independent witness and he certainly did not make any assessment of quantum meruit. The USD 12,000.00 was estimated in respect of 2 claims put in between April and May 1997. They were also subject to the qualifications he mentioned in his evidence. So, was the High Court right or wrong in its approach to the assessment of quantum meruit for the work done by the Respondents? The Respondents indorsed their Writs of Summons with a claim for the payment of the sum of USD 224,533.29, being the bill for the supply of equipment and materials and engineering services for HVAC works they executed. In paragraph 16 of the statement of claim the Respondents pleaded that they were entitled to the full value of the agreed contract price so far performed ie. USD 224,533.29. In other words, the bill referred to in the Writ of Summons was based on the contract price. Was the High Court right in accepting that figure?

The law in this area draws two clear distinctions. There are two bases for fixing the value of that quantum meruit: (a) reasonable remuneration fixed by the court. (b) quantum meruit assessed at the contract rate. Where one party starts to perform the contract but is prevented from completing it by the other party's breach, he can claim quantum meruit at the contract rate. In Lodder v. Slowey (1904) AC 442, the Plaintiff agreed to build a tunnel under the property of a local authority. The council subsequently wrongly excluded the contractor from the property and prevented him from completing the work in breach of contract. The Plaintiff claimed on a quantum meruit basis the value of the works done by him. The Privy Council held that where a contractor was wrongfully excluded from the site after performance, and is thereby precluded from completing the contract, he is entitled to treat the contract as terminated and claim on a quantum meruit basis for the work done and the materials supplied prior to the termination. In this sort of situation, the amount is really an apportionment of the total contract price. It is the ratio which the work done bears to the total volume of work required to be performed under the contract. From the pleadings and the evidence, this is what the Respondents were claiming. Where there is no concluded contract then the court must assess reasonable remuneration having regard to all the circumstances. An example is where one party does work at the request of another during negotiations which are expected to lead to a contract between them but are broken off and no contract results. In Craven-Ellis v. Canons Ltd. (1936) 2 KB 403, the Plaintiff, Craven-Ellis, was engaged by the Defendant company, initially in the capacity as a valuer and estate agent. From 1928 to 1931 he worked for the company without a formal contract. Then in 1931 a formal agreement was executed with the company's seal setting out the terms from which Craven-Ellis was to act as the company's managing director. However, none of the directors, including Craven-Ellis, was capable of making such an agreement as none of them held the necessary qualification shares as required under the company's articles of association. Accordingly, the contract was void ab initio. The Court of Appeal held that he was entitled to recover on the basis of quantum meruit in respect of the services rendered.

We have shown above that exhibit K1 did not come into effect and that as the parties intended that their relationship should be governed by that and not exhibit H, there was no valid contract between the parties. In the circumstances, the Respondents became entitled to what we will describe as "orthodox" quantum meruit - ie, reasonable remuneration assessed by the court and not the type assessed at the contract rate. In the result both the High Court and the Court of Appeal erred in accepting the figure of USD 224,533.29 claimed by the Respondents which was based on the contract price. Accordingly we set that award aside as erroneous.

What is the correct award then? The type of work the Respondents claimed to have executed for the Appellants is in a highly technical and specialist field of heating, ventilation and air-conditioning. It included engineering clarifications, co-ordination and selection of equipment, material and accessories, shop drawings, co-ordination with civil, architectural, plumbing and electrical drawings, fabrication of air-ducts for fan coil units etc. In order that the court may be properly informed of the correct amount, it appointed court experts, under section 114 of the Evidence Decree 1972 (NRCD 323).

Section 114 of NRCD 323 provides: "in any action at any time the court in its discretion may, on its own motion, or at the request of any party, appoint a court expert to inquire into and report upon any matter on which an expert opinion or inference would be admissible under section 112". With the consent of both parties this court appointed AESL to visit the site, study the work and submit a report to the court as to the correct amount to be awarded to the Respondents.

AESL duly entered upon the assignment and submitted their report dated April 2003 to the court. Copies of the report were also given to Counsel for the parties. On 16th April 2003 a representative of AESL, Mr Egbert Kwadzo Hohoabu, a Quantity Surveyor and a signatory to the report, formally tendered a copy in evidence. This was marked as Exhibit "SC 1" Counsel were then given the opportunity to cross- examine the witness.

In his evidence, the witness explained that the work the Respondents were expected to do were grouped into 10 heads. These had been listed in the report. He said each group was given equal weighting; ie 10%. He said, in all, three heads were not attempted at all. These were Nos 2, 8 and 10. Two others, Nos 5 and 9 were partly done and these were each rated at 5%. Five heads were fully discharged, ie Nos 1,3,4,6 and 7. Hence the total percentage work done was 60. The witness explained that the total value of the work for engineering was $97,674.96 and 60% of that came to $58,604.89

In our opinion we think items 5 and 9 were worth more than 5% each. We will increase them to 8% each making the total percentage 66. This will bring the total value of the engineering works to 66% of

$97,674.96                                   =     $64,465.47

Add value of ductworks                =     $4,875.81

Total value of work done               =     $69,341.28

We accept the opinion of the witness that the mobilization fee of $25,000.00 is not additional payment but rather advance payment which ought to be deducted from the total sum due to the Respondents. Therefore the net amount due and payable to the Respondents is $69,341.28 less $25,000.00 = $44,341.28.

In the result, in place of the sum of $224,533.29 awarded by the courts below, the Respondents are entitled to the sum of $44,341.28 as reasonable compensation for the HVAC works they executed on the New Executive Guest Rooms Wing of the Golden Tulip Hotel.

Simple Interest shall be calculated and paid to the Respondents on the sum of $44,341.28 at the dollar rate from 4th April 1997 to the date of this judgment.

MRS. J. A. BAMFORD-ADDO

JUSTICE OF THE SUPREME COURT

D. K. AFREH

JUSTICE OF THE SUPREME COURT

S. G. BADDOO

JUSTICE OF THE SUPREME COURT

DR. S. TWUM

JUSTICE OF THE SUPREME COURT

PROF. A. K. P. KLUDZE

JUSTICE OF THE SUPREME COURT

COUNSEL

MR. AMARKAI AMARTEIFIO FOR APPELLANT

MR. D. K. ANYADI FOR RESPONDENT

gso*