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JUDGMENT
BENIN, J.A:
The question raised in the Court
below was whether the
originating process adopted by
the plaintiffs in seeking
redress of a grievance it had
against the defendants was
appropriate. The plaintiffs
claimed to be the holders in due
course of five promissory notes
issued by the defendants in
favour of a company called Sabat
Motors to the order of Eaglet
Corporation Limited. The
plaintiffs came into the picture
apparently because Eaglet
Corporation endorsed the
promissory notes in their favour,
but which were dishonoured by
the defendant upon presentation
for payment on the due date.
The plaintiffs went to the High
Court by way of an originating
summons seeking what happens to
be the Court's construction of
these instruments as to whether
by them they were entitled to
payment with interest at the
current bank rate.
The defendants filed an
application to strike out this
originating process on grounds
that there are several facts in
dispute which make the process
adopted "irregular, improper and
constitutes an abuse of the
process of the Court ...….” The
facts alleged to be in dispute
were set out in the affidavit in
support of the application to
which I shall make reference
very shortly.
The plaintiffs opposed the
application on the ground that
they only sought the Court's
construction of the documents
and to determine the rights of
the plaintiffs in relation to
the said documents. The
plaintiffs also provided
rebuttal documentary evidence by
way of affidavit annexures.
The trial court considered the
facts and the law and ruled that
the process adopted was
“appropriate.” It went on to
hold that “however, the
defendants/applicants are
permitted to prove the mala
fides of the
plaintiffs/respondents by
providing the Court for its
examination and consideration,
any document that supports their
allegation of mala fides, not
that of Eaglet/Claremont or any
other person, at the hearing of
the Summons.”
The material facts raised by the
defendants are contained in
their affidavit in support of
the application to strike out
the summons. These are:—
“5……..the issuance of the
promissory notes by Sabat Motors
Limited ……. was made in flagrant
breach of a contract dated 5th
January, 1990 between Sabat
Motors Limited and Eaglet
Corporation Limited., the
European affiliate of an
American off-shore financier,
Claremont Group Limited which
was to provide funding for Sabat
Motors Limited to acquire
certain equipment.
6. That in consideration of the
credit facility to be provided
by Claremont Group
Limited/Eaglet Corporation
Limited to Sabat Motors Limited,
for the supply of the equipment
the Applicant provided a Bank
Guarantee in favour of Claremont
Group Limited, Subject to
certain conditions.
7. That the agreement dated 5th
January, 1996 provided, inter
alia, for the supply of
equipment by Eaglet Corporation
Limited, and its acceptance by
Sabat Motors as a condition
precedent to the issuance of the
promissory notes, the subject
matter of this action, but in
clear breach of the agreement
the promissory notes were issued
when the condition precedent
viz: the supply of the
equipment, had not been complied
with by Eaglet Corporation
Limited.
8. That in further breach of the
agreement, Claremont Group
Limited/Eaglet Corporation
Limited failed to provide the
requisite funding for the supply
of the equipment, with the
result that there was total lack
of consideration on the part of
Claremont Group Limited/Eaglet
Corporation Limited for the
promissory notes and a failure
to satisfy the precondition for
the issuance of the promissory
notes.
9. That by reason of the
foregoing, Sabat Motors Limited
explicitly repudiated the
promissory notes by various
correspondence to
Claremont/Eaglet Corporation and
specifically requested the
return or the retrieval of the
said promissory notes which
request was not honoured by
Claremont/Eaglet.
10. That there was full
notification by Sabat Motors
Limited to Claremont/Eaglet of
all the defects and flaws in the
issuance of the promissory notes
but notwithstanding such
notification and the repudiation
of the promissory notes by Sabat
Motors Limited, Claremont/Eaglet
endorsed the said promissory
notes for the benefit of the
respondent who now purports to
be a holder in due course which
is denied by the applicant.
11. That it is transparent from
the foregoing that there are
serious issues of facts in
dispute which cannot be resolved
in these proceedings by way of
an originating summons,
consequently this is not a
proper case to be commenced by
an originating summons and in
that regard the respondent's
instant action ought to be
dismissed with costs.
12. That in the circumstances
the respondent's instant action
commenced by way of an
originating summons is
irregular, improper and
constitutes an abuse of the
process of the Court and
accordingly must be dismissed……”
The plaintiffs exhibited some
letters from the defendants
confirming the promissory
notes. The trial court, as I
said earlier, considered the
facts and relevant law and rules
of practice and procedure in
coming to its decisions. The
defendants who were dissatisfied
have appealed to this court on
the following grounds:—
(a) The trial court erred in law
in holding that the commencement
of the instant proceedings by
the plaintiff/respondent by way
of an originating summons was
regular and appropriate
notwithstanding the conflicting
mass of evidence adduced by both
parties to the action.
(b) That trial court erred in
law in ruling that the
commencement of the proceedings
by way of originating summons
was regular and appropriate
notwithstanding that the
respondents’ application in this
case does not raise a question
of construction of an instrument
or in any way depend upon the
construction of an instrument
which error has occasioned
appellants substantial
miscarriage of justice.
(c) The trial court erred in law
in ruling that the commencement
of the proceedings by way of
originating summons was
appropriate notwithstanding the
existence of sharply dispute
facts which can only be tested
by viva voce examination.
(d) That trial court erred in
law in holding that the
respondents were holders in due
course when:
(i) no evidence was led to
establish that status:
(ii) the trial court itself
conceded that the good faith of
the respondents was disputed by
appellants and ought to be
proven which error has
occasioned appellants
substantial miscarriage of
justice.
(e) The trial court misapplied
the provisions of Order 54A of
the High Court (Civil Procedure)
Rules, 1954 (LN.140A) to the
proceedings having regard to the
fact that a decision one way or
the other on the affidavits
filed would not determine all
matters in dispute between the
parties but would involve
further litigation thereby
making the proceedings by way of
originating summons
inappropriate.
(f) The trial court erred in law
in restricting the scope of the
appellant's case to providing
documentary evidence of the
respondent's mala fides, thereby
denying the appellants the
opportunity to adduce all
relevant evidence, such as fraud
that would vitiate the validity
of the respondents' status as
holders in due course and indeed
the validity of the promissory
notes themselves.
I shall take these grounds
according to the order by which
they were argued by Counsel for
the appellant except ground (f)
which I shall deal with
alongside (a) and (c). First,
grounds (a) and (c) were argued
together. Order 54A, rule 1 of
the High Court (Civil Procedure)
Rules, 1954 (L.N.140A) under
which the summons was issued
provides that:
Any person claiming to be
interested under a deed, will or
other written instrument, may
apply by originating summons for
the determination of any
question of construction arising
under the instrument, and for a
declaration of the rights of the
persons interested.
This provision has been
interpreted by the Supreme Court
in the case of Poku and Another
v: Kwao and Another (1989-90) 2
GLR.82 to be the proper and
indeed the appropriate procedure
where the sole or principal
question at issue is, or is
likely to be, one of the
construction of a deed or of any
instrument, or some other
question of law, or in which
there is unlikely to be any
serious and substantial dispute
as to the relevant facts.
And in the case of Republic vrs:
High Court, Accra; Ex-parte
Ploetner (1984-86) 2 GLR.107,
the Supreme Court held that the
case before the High Court was
not a proper one to commence by
originating summons because,
among other factors, on the face
of the affidavit a decision one
way or the other would not
determine all matters in
difference between the parties
but would involve further
litigation. See also Siasuom
vrs: Kyi (1971) 1 GLR.483 C.A.
It was the contention of Counsel
for the defendants/appellants
that (i) a lot of conflicting
evidence was adduced by both
parties: (ii) there was a
substantial dispute as to the
facts. These facts related to
(a) lack of consideration; (b)
repudiation of the promissory
notes; (c) mala fides. The trial
court resolved the first two on
the affidavits before it and
called for further evidence to
resolve the third. It resolving
the first two questions of fact
the trial court relied solely on
two letters written by the
defendants confirming the
promissory notes. I thought at
this stage the defendants were
only drawing attention to the
fact that very serious questions
of fact are involved; it did not
mean the court should decide on
the questions of fact when the
party had not declared an
intention to rely on only
affidavit evidence or otherwise.
And also it was too early to
determine those questions. Yet
the trial court could not be
seriously faulted since it had
to determine the
application one way or the
other. But I think the trial
court failed to appreciate the
points raised by the defendants
that Sabat Motors repudiated the
promissory notes before Eaglet
endorsed same for the
plaintiffs. It was on account of
this the defendants charged the
plaintiffs with mala fides. And
the trial court, having given
leave for the issue of mala
fides to be tried, seemed to
have agreed, albeit prima facie,
that there was some factual
dispute, and a substantial one
at that, to be resolved. The
plaintiffs claim to be holders
in due course and for that
reason it must be established
that: (i) they became the
holders before the due date and
without notice that it had been
previously dishonoured, if such
was the fact: (ii) that they
took them in good faith and for
value, and that at the time the
instrument was negotiated to
them they had no notice of any
defect in the title of the
person who negotiated it. See
s.27(i) of the Bills of Exchange
Act, 1961 (Act.55). See also
vol.4 of Halsbury's Laws of
England, 4th Edition, Paragraph
388 where it is stated that as
regards the defectiveness of a
person's title to an instrument,
it may be established that he
obtained it "by fraud, duress,
force of other unlawful means or
illegal consideration, or when
he negotiates it in breach of
faith, or in such circumstances
as amount to fraud."
The defendants have raised
pertinent questions as regards
the fact that there was a total
lack of consideration so the
instruments were repudiated
before the plaintiffs got them.
Very material issues of fact
arise namely: (1) Was there no
consideration provided for the
instruments? (2) Were they
repudiated by Sabat Motors? (3)
If they were, was it before they
got into the hands of the
plaintiffs? (4) Were the
plaintiffs aware of the
repudiation before they became
holders of the instruments?
Having regard to the facts
raised by the defendants, if
found established, they would
mean Eaglet negotiated the
instruments in breach of faith,
failed to provide any
consideration and so the notes
were repudiated to the knowledge
of the plaintiffs. In these
circumstances the plaintiffs
cannot in law claim to be
holders in due course of the
promissory notes. These are very
substantial issues of fact which
cannot appropriately be
determined by the process of
originating summons.
In another reasoned judgment,
this court decided in the case
of Korbla II alias Tetteh and
Another vrs: Odartei III (1980)
GLR.932, that originating
summons was not appropriate
where there was likely to be any
substantial dispute and that
where there are disputed facts
which can only be tested by viva
voce examination, the initiation
of proceedings by resorting to
originating summons is most
inappropriate.
In the instant case it is my
considered opinion that the
facts are so complex and involve
several parties, some of whom
are presently not before the
court, that it may not be
possible to prove them by
affidavits only.
And even if the parties wish to
tender only affidavit evidence
yet the facts are so intricate
and plentiful that the court
will have to make several
findings of fact before it can
construe the instruments, thus
defending the very purpose of
this process which is
expeditious hearing on mainly
questions of law.
Secondly, as decided by the
Supreme Court in the Ex-parte
Ploetner CASE (supra), this
process is resorted to only if
the construction of the
instrument will settle the
litigation, See also Lewis vrs:
Green (1905) 2 Ch 340: 74 L.J.
Ch.682. But as it has turned up
here, even at the end of its
ruling, there is still an
outstanding issue of fact for
which the court is calling for
evidence by affidavit to enable
it decide on the summons. The
court itself realised it cannot
deal with the summons by way of
legal arguments only; it needs
to ascertain the facts thereby
rendering the process
inappropriate. I'm not saying
the court can never ascertain
the facts, it cannot do so where
the facts are in serious dispute
requiring a lot of evidence
especially viva voce evidence.
Whilst on this, I'll take the
last ground of appeal at this
stage since it is closely linked
up with my second reason for
disagreeing with the court
below. The trial court called
for affidavit evidence only on
the question of plaintiffs' mala
fides. Even though viva vice
evidence is not always
necessary, a court is not
entitled to restrict a party to
any form of testimony, oral or
documentary or both; it is a
discretion for the party on
issues of fact, to determine how
to present his evidence. And
indeed it is dangerous and
plainly unjust for a court, in
order to satisfy a party who is
accused of having adopted a
wrong process, to compel the
other party to present his case
in a particular position. The
trial court must have realised
that taking oral evidence on the
question of mala fides would
render the originating process
inappropriate hence the call for
only affidavit evidence. The
conclusion reached is surely
wrong as it fetters the hands of
the defendants, and it is also a
recognition that the summons
could not be determined by
construing the instruments only.
Though R.4 or Order 54A entitles
the court to call for evidence
it does not mean it can shut out
a party who may wish to offer
oral testimony if his case also
rests on oral evidence, for
example if he seeks to rely on
parol agreement. It must be
borne in mind that an agreement
in writing may be varied or even
repudiated orally in some cases.
It is interesting to note that
Counsel for the plaintiffs
agreed that the defendant was
entitled to prove the issue of
mala fides, largely an issue of
fact. In his address this is
what counsel wrote: "In proving
the mala fides of the
plaintiffs/respondents, the
defendant/appellant may by
documentary or oral evidence
prove fraud or any other fact
which proves that the
plaintiffs/respondents are not
holders in due course" (the
emphasis
is mine). It seems Counsel for
plaintiffs does not even agree
with the trial court's decision
confining the parties to only
affidavit evidence, and I think
Counsel is perfectly right.
Counsel continued: "Order 54A
does not preclude a trial of
lack of good faith or fraudulent
behaviour of a party by evidence
given orally, or by affidavit
evidence. And, at that stage the
defendants/appellants are at
liberty to prove that they had
been contacted by previous
endorsees and they had declined
to confirm the validity of the
promissory notes or that the
plaintiffs/respondents were
aware of the fraudulent
behaviour of their endorsee and
therefore cannot be holders in
due course" Counsel acknowledges
that the defendants are entitled
to lead all the evidence they
have, in order to disprove the
validity of the promissory notes
particularly through the mala
fides of the plaintiffs, and
with this awareness one wonders
why this process was adopted.
The procedure provided by order
54A does not permit a full trial
by way of examination,
cross-examination etc of
witnesses on oath; it does not
permit the trial court resolving
disputed questions of fact after
taking evidence. Indeed if this
is permitted the very essence of
the process will be completely
eroded, if not destroyed, which
is to allow for determination of
matters based on law only and/or
construction of deeds,
instruments, contracts etc. and
declaring the rights of parties
under them without recourse to
viva voce examination. If a
trial by examination of
witnesses, or even by resolving
several disputed facts has to
take place, albeit by
affidavits, this process is
clearly inappropriate. It is
worthy to follow the decision in
Lewis vrs: Green (supra) that in
as much as questions, both of
fact and of construction were
involved, and a decision of the
questions of construction would
not, in whichever way they were
decided, necessarily put an end
to the litigation, an
originating summons was not the
proper mode of procedure.
Therefore, I will uphold grounds
(a), (c) and (f).
Ground (b). From the decided
Authorities I mentioned earlier,
the use of order 54A is in order
if there is question of
construction involved and which
determines the rights of the
parties. It is the contention of
the defendants that there is no
question of construction raised
hereto as to involve Order 54A.
It is plainly a question of
plaintiffs seeking to recover
money from the defendants using,
for their authority or evidence,
the promissory notes. By
definition a promissory note is
an unconditional promise in
writing made by one person to
another, signed by the maker,
engaging to pay on demand or at
a fixed or determinable future
time a sum which is certain in
money. Essentially therefore it
is a promise to pay a sum of
money only, see Mortgage
Insurance Corporation vrs:
Inland Revenue Commissioners
(1888) 21 QBD.352 at p. 358
C.A., per Bowen, L.J. See also
Wirth vrs: Weigel Leygonie &
Co., Ltd (1939) 3 All E.R. 712
at p.720 per du Parcq. L.J.
It is the view of Counsel for
the appellants that this “is an
obvious case of a claim for
payment of the amounts
represented on the promissory
notes with interest." He
submitted that "No issue of
construction or interpretation
of the promissory notes was
raised or was
posed by the respondent as the
principal issue ....... Having
regard to the fact that the
respondent's claim was in
essence a claim for the payment
of money based on the promissory
notes, the resort to the use of
originating summons by the
respondent was clearly
inappropriate and untenable ………
in a claim for payment of money
and interest based on a
promissory note as in the
instant case, the respondent was
obliged under Order 2 Rule 1 of
the High Court rules to commence
the action by a writ of summons
and not by way of an originating
summons."
This is the response of Counsel
for the plaintiffs/respondents:
“the …………. question posed for
determination by the High Court
does not claim for an order for
payment for the face value of
the promissory notes with
interest. The issue is whether
the plaintiff/respondent is
entitled to payment with
interest the face value of the
promissory notes. The answer to
the question is in the
construction of the promissory
notes..…. There is no claim for
money and interest before the
High Court of Justice. So Order
54A is the appropriate order to
have resort to."
A promissory note is in the
nature of a contract hence the
requirements, of consideration
etc. to validate it, and also
the existence of factors which
can vitiate a contract. And a
court can construe a contract
under order 54A if it is in
writing since a written contract
is an instrument within the
meaning of the rule. See Mason
vrs: Schupisser (1899), 81 L.I.
147. Hence if the contract is to
pay money it can be construed by
the Court as such. A party may
also go to court to seek
declaratory reliefs only even by
a writ of summons. Thus where
there is a written contract for
the payment of money a party may
go to court by way of an
originating summons. Hence it is
no argument that because a claim
is essentially to recover money
with interest it cannot be begun
by originating summons,
especially if it is realised
that a promissory note is
nothing but a document which
consists substantially of a
promise to pay a sum of money.
This ground of appeal is
accordingly rejected.
Next, ground (d). The trial
court set out the requirements
in law to make a person qualify
as a holder in due course. It
set out the facts relied upon by
the parties and said that "there
is absolutely nothing on the
face of the promissory notes to
show that there is any defect on
them...” The Court was referring
to documentary evidence which it
found was not available so that
the defendants could only be
relying on oral testimony. And
this, it wondered, the
plaintiffs might not be aware
of. From the definition of
holder in due course which I set
out above and which the trial
court rightly held, a holder in
due course qualifies as such if,
among others, he took the
instrument in good faith and
without knowledge of any defect
in the title of the one from
whom he got it. These are
largely questions of fact. But
certain presumptions immediately
come into play in favour of a
holder if the promissory note
appears regular and complete on
its face.
First it raises a reputable
presumption that the holder is a
holder in due course since by
making a deed, a person is
presumed to intend the ordinary
consequences of his voluntary
act; and moreover an official
act, like the one in question,
is presumed to have been
regularly performed, so the
person denying it will have to
assume the burden of
persuasion. Hence I do not
agree with Counsel for the
defendants when he says the
burden of persuasion lies on the
plaintiffs since the promissory
notes appear regular and
complete on their face, which is
the only evidence, albeit prima
facie, that they require to
establish their status. Next,
subject to any relevant law or
equity, the facts as recited in
a document are conclusively
presumed to be true as between
the parties and their successors
in interest. So whichever
presumption is applied it enures
to the benefit of the holder so,
the burden of proof shifts to
the person challenging same if
the holder decides to rely
solely on the instruments and
allow same to speak for
themselves, if regular and
complete on their fact.
But the trial court having
realised the need to prove at
least a vital ingredient, that
of mala fides, it means that
plaintiffs do not qualify yet as
holders in due course for their
rights to be so declared under
the instruments. And as I have
already held, this question of
fact cannot be dealt with in the
restrictive manner proposed by
the trial court. Mala fides, as
conceded by Counsel for the
plaintiffs, involves a lot
including even matters of fraud,
and no doubt you cannot compel a
party to prove fraud by
affidavit evidence only. It
would be a fraudulent act by the
plaintiffs against the defendant
if the former knew that the
notes had been repudiated by
Sabat Motors due to total lack
of consideration before they
(plaintiffs) acquired them from
Eaglet. Fraud vitiates
everything, and if established
it would be conclusive evidence
of Mala fides and therefore
prevent plaintiffs from being
holders in due course. Thus with
the serious issue like mala
fides raised and accepted by the
trial court, the only conclusion
open was to strike out the
originating summons to enable a
writ to be issued under Order 2
Rule 1. It is for the foregoing
reasons that I allow ground (d).
Finally, ground (e). It is the
contention of Counsel for the
appellants that there would
still be some further litigation
even after a determination by
the court, so the process of
originating summons is
inappropriate. He cited for his
reference the issue of mala
fides. I think Counsel has not
given the correct interpretation
to the trial court’s decision.
The trial court actually called
upon the defendants to prove
mala fides to enable it
determine the originating
summons having taken the view
that the plaintiffs had nothing
to prove beyond tendering the
promissory notes which are
regular and complete on their
face. Thus it was not an
additional litigation that the
trial court's decision to call
for evidence, was inviting so as
to be caught by the principle in
Lewis vrs: Green (supra)
approved in the Ex-parte
Ploetner case (supra) that
originating summons was not
appropriate if it would not
determine all matters in
difference between the parties.
It must be noted that the trial
court was not determining the
summons itself but was dealing
with an application to strike
out the summons. This ground
fails.
In conclusion, it is my view
that there are serious and
substantial questions of fact
which call for evidence, oral
and/or documentary to resolve.
The parties must be given every
opportunity to present their
case in the best possible way
they deem fit. This particular
applies to the defendants who
strenuously seek to reject their
own act, a burden which they
assume and a heavy one at that.
They know and believe these
notes have been repudiated due
to total failure of
consideration and defect in the
title of the holder, Eaglet.
They know and believe plaintiffs
were aware of these antecedent
facts before they took the
notes. So the defendant must be
allowed to answer the question
posed by the trial court namely:
“How then was the
plaintiff/applicant to know all
the oral agreements
defendants/respondents claim
they had made with Eaglet and
Sabat?”. The answer may be in
oral evidence if there were any
“oral agreements” as
acknowledged by the trial court.
And with that acknowledgement,
surely the originating summons
is not the appropriate process
to resolve serious and
substantial disputed facts which
might require viva voce
examination.
I will allow the appeal and set
aside the trial court’s
conclusions, strike out the
originating summons to pave the
way for the plaintiffs’, if they
are so minded to issue a writ of
summons by virtue of Order 2,
Rule 1 of the High Court Rules.
A. A. BENIN
JUSTICE OF APPEAL
FORSTER, J. A.:
I agree
A. A. FORSTER
JUSTICE OF APPEAL
AFREH, J. A.:
I also agree
D. K. AFREH
JUSTICE OF APPEAL
COUNSEL
Amarteifio & Co. for
Plaintiffs/Respondents.
S.K.B. Asante & Associates for
Defendants/Appellants. |
