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Banking – Non
- banking financial institution
- Credit facility – Agrement -
Guarantee - section 5 (1) -
Contract Act (Act) 25. -
Contract of haulage - Interest
rate - Refusal to honour the
undertakings – Whether or not
the Ministry of Energy was a
guarantor to the loan - Whether
or not the letter of undertaking
constituted the only security
for the loan transaction between
to the exclusion of the Mortgage
over the landed property -
Whether or not 2nd
defendant has paid all proceeds
under the haulage contract to 1st
defendant contrary to the
undertakings aforesaid
HEADNOTES
The facts of
this case admit of no
controversy whatsoever. The
Plaintiffs are a non-banking
financial institution
incorporated in and under the
laws of Ghana. They were
approached in their normal line
of business by Ahaman
Enterprises Limited, a haulage
company for a credit facility,
to enable them execute contracts
awarded them by the Ministry of
Energy to haul electricity poles
and other electrical materials
from designated locations to
various parts of the countryval
of the credit facilities that
the 1st Defendants
therein requested from the
Plaintiffs, the Plaintiffs
required the 1st
Defendants to secure a guarantee
from the Ministry of Energy that
payments due under the contract
Defendants herein failed and
or refused to honour the
undertakings and guarantees
contained in the Ministry of
Energy letters to the plaintiffs
and the 1st
Defendants to the effect that
all payments in respect of the
contract between the 1st
Defendant and the Ministry of
Energy would be paid in the
joint names of the plaintiffs
and the 1st
defendants the learned trial
Judge delivered judgment in
favour of the Plaintiff, but
dismissed Plaintiffs claims
against the 2nd
Defendants Predictably
dissatisfied and aggrieved with
the decision of the High Court
against the Plaintiffs
successfully appealed against
the said decision to the Court
of Appeal. Accordingly, the
Court of Appeal in a unanimous
decision rendered in favour of
the Plaintiffs
HELD
From the
Plaintiff’s writ of summons, it
is also seeking a consequential
rder that defendants
herein pay to it all sums
together with interest at
the rate of 6.5% per
month paid to 1st
defendant, Ahaman Enterprises
Limited by the Ministry of
Energy in contravention of the
letters of undertakings dated 19th
August 2005, 22nd
September 2005, 13th
October 2005, 2nd
February 2006, 27th
April 2006 to date of filing the
appeal in the Court of Appeal.
We will grant the Plaintiffs
prayer except to add that all
the sums due under the haulage
contract together with interest
at 6.5% per month that were paid
to the 1st defendant
in contravention of the letters
of undertakings after the
Accounts had been rendered by
the Ministry of Energy should be
paid jointly by Ahaman
Enterprises and the defendants
herein to the Plaintiffs.
STATUTES
REFERRED TO IN JUDGMENT
Contracts Act
1960 Act 25,
CASES
REFERRED TO IN JUDGME
Republic v
Kumasi Traditional Council;
Ex parte Opoku Agyeman II [1977]
1 GLR 360;
Mahama v Soli
[1977] 1 GLR 215, 237
Ndoley v
Iddrisu [1979] GLR 559, 565.
Attieh v
Koglex [GH] Ltd. [2001-2002]
SCGLR 936, 944
BOOKS
REFERRED TO IN JUDGMENT
DELIVERING
THE LEADING JUDGMENT
DOTSE, J.S.C:
COUNSEL
SYLVIA A.
ADUSU (MRS) ESQ. CHIEF STATE
ATTORNEY FOR THE 2ND
DEFENDANT /RESPONDENT/APPELLANT.
PEASAH BOADU
ESQ. FOR THE
PLAINTIFF/APPELLANT/ RESPONDENT.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
DOTSE,J.S.C:
This is an
appeal by the Defendant,
Respondent/Appellant, hereafter
referred to as the Defendant,
against the decision of the
Court of Appeal, dated 28th
March 2013 which was in favour
of the
Plaintiffs/Appellants/Respondents,
hereafter referred to as the
plaintiffs. In a nutshell,
whilst, the Plaintiffs, claims
against the Defendant, (therein
2nd Defendants) was
dismissed by the judgment of the
High Court, dated 21st
December 2011, the Court of
Appeal on the 28th
March 2013 reversed the judgment
of the High Court, and entered
judgment in favour of the
plaintiffs herein.
BRIEF FACTS
The facts of
this case admit of no
controversy whatsoever. The
Plaintiffs are a non-banking
financial institution
incorporated in and under the
laws of Ghana. They were
approached in their normal line
of business by Ahaman
Enterprises Limited, a haulage
company for a credit facility,
initially in the sum of
GH¢30,000.00 to enable them
execute contracts awarded them
by the Ministry of Energy to
haul electricity poles and other
electrical materials from
designated locations to various
parts of the country under the
National Electrification
Project. In the course of time,
the said Ahaman Enterprises Ltd,
who were sued therein by the
Plaintiffs in the High Court as
1st Defendants
applied for further amounts of
credit facilities from the
Plaintiffs. As a condition for
the approval of the credit
facilities that the 1st
Defendants therein requested
from the Plaintiffs, the
Plaintiffs required the 1st
Defendants to secure a guarantee
from the Ministry of Energy that
payments due under the contract
for the haulage of the
electrical poles and other
materials would be made in the
joint names of the 1st
Defendant and the Plaintiffs.
Relying on the Ministry of
Energy’s letters in support of
each credit line facility
applied for by the 1st
Defendants, the Plaintiffs
approved, advanced and disbursed
various sums of money to the 1st
Defendants as requested
by them, pursuant to loan
agreements executed between the
1st Defendants and
the Plaintiffs on 26th
August 2005 and thereafter in
respect of all the credit
advances, as per the offer
letters dated 28th
September 2005, 7th
October 2005, 13th
October 2005, 2nd
February 2006 and 28th
April 2006 all to the total sum
of GH¢340,000.00, at an interest
rate of 6.5% per month
calculated at the end of each
day and payable at the end of
every month until the date of
final payment.
It is the
plaintiffs contention that, the
Defendants herein failed and or
refused to honour the
undertakings and guarantees
contained in the Ministry of
Energy letters to the plaintiffs
and the 1st
Defendants to the effect that
all payments in respect of the
contract between the 1st
Defendant and the Ministry of
Energy would be paid in the
joint names of the plaintiffs
and the 1st
defendants.
Matters came
to a crisis point, when the
Plaintiffs discovered that by a
letter No. K838/127/01, dated 17th
December 2008, the Ministry of
Energy directed the Ministry of
Finance to pay the sum of
GH¢286,250.52 being proceeds due
the 1st Defendants
under the haulage contract to
them without reference to the
plaintiffs.
When the 1st
Defendants indeed received the
said sum of GH¢286,250.52
without paying same to the
Plaintiffs to redeem their
indebtedness and when all
attempts through series of
correspondence to the Defendants
herein yielded no positive
result, the Plaintiffs initiated
action in the High Court,
against several defendants, but
the suit was eventually
conducted against only three
defendants, namely the 1st
Defendants, already referred to
supra, the Defendants herein,
(therein as 2nd
Defendants) and one Alex Aduko,
a Director of 1st
Defendant company.
The reliefs
which the Plaintiff claimed
against the Defendants in the
High Court were as follows:
1.
Against 1st 3rd
and 4th defendants an
order for recovery of the sum of
GH¢1,008,833.70 being
the balance due and owing as at
31st March 2009,
on account of credit
facilities extended to 1st
defendant by plaintiff
between 26th
August 2005, and 28th
April 2006, repayment of which
was secured by 3rd
and 4th defendants
but payment of which they have
failed to make good several
demand notices notwithstanding.
2.
Interest on the said sum of
GH¢1,008,833.70 at the rate of
6.5% per month
calculated at the close of each
day and payable at the end of
every month from 1st
April, 2009 up to and inclusive
of final payment.
3.
Costs
4.
Plaintiff also claims jointly
and severally against defendants
the sum of GH¢286,250.52
being part of the debit balance
due under the facilities
granted to 1st
defendant by plaintiff between
26th August 2005 and
28th April
2006, which sum was secured
together with other payments due
1st defendant by
2nd defendant but
paid to 1st defendant
on 6th January 2009
as a result of collusion by
defendants.
5.
Interest on the said sum of
GH¢286,250.52 at the rate of
6.5% per month calculated at the
close of each day and payable at
the end of every month
from 7th January 2009
up to date of final payment.
6.
Costs
7. An
order upon 2nd
defendant to render accounts of
all payments made to 1st
defendant under contracts
awarded to 1st
defendant by Ministry of
Energy from 19th
August 2005 to date of filing
this suit.
8. A
consequential order that 2nd
defendant shall pay to plaintiff
all sums together with
interest at the rate of 6.5% per
month paid to 1st
defendant by Ministry of
Energy in contravention of
letters of undertaking dated
August 19th
2005, September 28th
2005, October 13th
2005, February 2nd
2006 and April 27th
2006 up to date of filing this
suit.
After trial,
in which only the Plaintiffs and
the 2nd Defendants
testified and tendered
documents, the 1st
and 3rd Defendants
having failed to do so after
repeated opportunities to them
to open their Defence, the
learned trial Judge delivered
judgment in favour of the
Plaintiff against 1st
and 3rd Defendants,
but dismissed Plaintiffs claims
against the Defendant herein,
therein 2nd
Defendants as follows:
“Though
the haulage contract in the
instant case is not before the
court, from the pleadings
and the evidence before the
court, it is obvious that
plaintiff is not a beneficiary
under the contract. Indeed the
contract was made before the
undertaking and at a time when
plaintiff could not have
been within the
contemplation of the parties.
The undertaking being
contemporaneous to the contract,
I hold the plaintiff is not a
third party within the meaning
and intendment of section 5 (1)
of Act 25.
Where in exhibit Z the Ministry
undertook to make payment in the
joint names of the
plaintiff and 1st
defendant and not to vary or
waive same without the
consent of both parties in
writing, it is my view that
the Ministry was in breach
of this representation when it
changed the directive
and made payments under
the haulage contract to
persons other than
plaintiff without recourse to
plaintiff. However as earlier
discussed in the absence of
consideration for the promise,
representation can best be
described as assurance of
payment, not intended to be
binding. Plaintiff has no claim
against 2nd Defendant
in contract. I
accordingly dismiss the case
against 2nd defendant
together with all the
reliefs endorsed on the writ of
summons as relief 2.
Where as in the instant case,
the Ministry has
made full payment under the
contract to 1st
defendant and the evidence shows
that the payments
were made to other financial
institutions on the instructions
of 1st
defendant, I find no justifiable
reason to accede to plaintiff’s
prayer.” Emphasis
supplied
Predictably
dissatisfied and aggrieved with
the decision of the High Court
against the Plaintiffs in
relation to their claims against
the Defendants herein, the
Plaintiffs successfully appealed
against the said decision to the
Court of Appeal.
Accordingly,
the Court of Appeal in a
unanimous decision rendered on
the 28th of March,
2013, in favour of the
Plaintiffs held as follows:
“From
the record of appeal the
Ministry of Energy gave
undertakings to pay
all contract proceeds under the
haulage contract in the joint
names of the appellant
and 1st defendant.
Exhibits D, K and V are clear on
this. Then by Exhibits DD2
payment of haulage contract
proceeds in the sum
of GH¢286,250.40 was made into
the account of Ahaman
Enterprises at
Ecobank Ghana Limited on the
instructions issued by the
Ministry of Energy. If
the Ministry of Energy had not
acted in breach of the
undertakings, the payment that
went to Ecobank, SDC Investments
and other financial
institutions could have paid off
the facilities granted the 1st
defendant. If the
trial Judge had applied these
pieces of evidence in the
appellant’s favour it would have
given judgment in the
appellant’s favour.”
With the
above rendition, the Court of
Appeal directed as follows:-
From the plaintiff’s writ
of summons, it is also seeking a
consequential order
that 2nd defendant
pay to it all sums together
with interest at the
rate of 6.5% per month paid to 1st
defendant by Minister of
Energy in contravention of the
letters of
undertakings dated 19th/8/2005,
22/9/2005, 13/10/2005,
2/2/2006, 27/4/2006 to date of
filing this appeal. We will
grant the appellant’s prayer
except to add that all the sums
due under the
haulage contract together with
interest at 6.5% per month
that were paid to the 1st
defendant in contravention of
the letters of undertaking
after the Accounts had been
rendered by the Ministry
of Energy should be paid jointly
by the 1st and 2nd
defendants to the
appellant.” Emphasis supplied
It is this
judgment that the Defendants
have appealed to this court with
the following as the grounds of
appeal:-
Grounds of
Appeal
i.
The learned Court of Appeal
erred when it ruled that the
Ministry of Energy was a
guarantor to the loan taken out
by the Ahaman Enterprises simply
because it undertook to pay
monies owed Ahaman Enterprises
in the joint-name of the
Respondent and Ahaman
Enterprises.
ii.
The learned Court of Appeal
erred when it ruled that the
letter of undertaking
constituted the only security
for the loan transaction between
the Respondent and Ahaman
Enterprises to the exclusion of
the Mortgage over the landed
property and the three
guarantors to the loan.
iii.
The learned Court of Appeal
erred when they ruled that the
Appellant and Ahaman Enterprises
pay to the Respondent all sums
(together with interest at
the rate of 6.5% per month) paid
to Ahaman Enterprises
Limited by the Ministry of
Energy to date of filing the
appeal in the Court of Appeal.
We have
considered the statements of
case filed by learned counsel
for the parties in this case. We
will consider the issues raised
therein by the learned counsel
when we consider the merits of
the appeal herein.
From the
grounds of appeal and the
submissions of learned counsel
in their statements of case, the
issue that stands out for
determination can be formulated
as follows:
Whether the
letters of undertaking and
guarantee written by the
Ministry of Energy to the
Plaintiffs and 1st
Defendants constituted
sufficient basis for the Court
of Appeal’s decision that the
Defendants and Ahaman
Enterprises pay the plaintiff
all sums (together with interest
at the rate of 6.5% per month)
paid to Ahaman Enterprises by
the Ministry of Energy to date
of filing the appeal in the
Court of Appeal.
Findings of
Undisputed Facts by the Trial
Court
It is
interesting to observe that, the
learned trial Judge made certain
findings of fact which were
stated as undisputed.
These
findings have been found to be
crucial for the determination of
the solitary issue formulated
from the grounds of appeal, and
we therefore deem it expedient
to refer to them in extenso as
follows:-
1.
That prior to the grant of the
facilities to 1st
defendant, the Ministry wrote to
1st defendant to make
payments under the haulage
contract in the joint names of
plaintiff and 1st
defendant and also undertook not
to revoke waive or alter the
undertaking without the written
consent of the 1st
defendant.
2.
That the haulage contract
preceded the undertaking.
3.
That the Ministry was aware that
1st defendant
contracted loans from
plaintiff to execute the haulage
contract.
4.
That plaintiff relied on the
undertaking given by the
Ministry in advancing the
loans to 1st
defendant.
5.
That in exhibit DDI, a letter
addressed by the Ministry to
plaintiff, dated 27th
April 2006, the Ministry
confirmed that the outstanding
amount owed 1st
defendant in respect of the
contract was 6.3 billion cedis.
6.
That in the said letter which
was copied to 1st
defendant, 2nd
defendant confirmed that they
owe 1st defendant the
sum of 2.5 billion cedis and
undertook to continue to
make all payments in the joint
names of Ahaman Enterprises
Ltd/NDK Financial Services Ltd
until otherwise advised by both
parties. Finance and Economic
Planning on advice from the
Ministry of Energy instructed
the Controller and Accountant
General to release the sum of
GH¢268,250.52 to 1st
defendant’s Ecobank account
without recourse to plaintiff.
See exhibit DD2.
7.
That 1st defendant
had similar arrangements with
the Ministry to make payments in
the joint names of 1st
defendant and other finance
institutions from whom they had
taken loans to finance the
haulage contract.
8.
That the Ministry has made full
payment under the haulage
contract to defendant.
It is also
very interesting to note and
observe that the learned trial
Judge, also formulated some very
important issues which she
considered as germane in
resolving the conflict between
the parties at the trial court.
These issues
were formulated by the trial
court as follows:-
1.
“Whether or not plaintiff relied
on the Ministry of Energy’s
letter dated 19th
August 2005, and approved the
sum of GH¢30,000 for a period of
3 months at the interest
rate of 6.5% to the 1st
defendant.
2.
Whether or not prior to the
grant of additional facilities
to 1st defendant,
Ministry of Energy by
letters dated 2nd
February 2005, 13th
October 2005, and 27th
April 2006 agreed to pay
proceeds due 1st
defendant under the haulage
contract in the joint names of
plaintiff and 1st
defendant company.
3.
Whether or not 2nd
defendant has paid all proceeds
under the haulage contract
to 1st defendant
contrary to the undertakings
aforesaid.
4.
Whether or not plaintiff is
entitled to its claims
Plaintiff testified at the trial
through Mr. Ebenezer Aminarh
Head of Produce Division and
called no further witness. He
told the court that as a
standard practice, on receipt of
a letter of understanding
involving payment by a third
party, an official from
plaintiff follows up to the
institution to
verify the contents of the
letter. On this occasion the
witness said he personally
went to the Ministry and met one
Mr. Ashie the Principal
Accountant who signed the
undertaking letter. He confirmed
that 1st defendant
had been engaged to haul
electric poles under the
national electrification project
and also confirmed amount owed 1st
defendant as at the time.”
From the
appeal record, the undisputed
findings of fact as
chronologically listed by the
learned trial Judge and the
issues found to be germane to
the resolution of the impasse
between the parties indicate
that, the logical and rational
decision that ought to have been
arrived at, was to have found
for the plaintiffs as against
the Defendant’s herein.
In order to
fully understand this
conclusion, it is necessary to
quote in extenso Exhibit D,
which is a letter from the
Ministry of Energy to the
Managing Director, Ahaman
Enterprises Limited (1st
Defendant’s therein) and copied
to the Chief Executive Officer
of the Plaintiffs company. It
states as follows:-
“National Electrification
Scheme – Payment of Haulage
We refer to your letter dated 18th
August 2005 requesting that
future payments under
the above project should be
jointly in the names of
Ahaman Enterprises Ltd/NDK
Financial Services Ltd. it is
our understanding that
this is in connection with a
facility they are offering to
enable you discharge your
obligations under the contract
with us.
We hereby undertake and
guarantee that payment for the
above order in the
amount of ¢500 million when due
will be made in the joint
names of Ahaman Enterprises
Ltd/NDK Financial Services Ltd.
We also confirm that the above
is the only acceptable means for
the payment of the
haulage executed and that the
obligation of payment in
the above joint names
remains our responsibility (the
emphasis is mine).
We note that this directive
cannot be revoked, waived or
altered without your written
consent.”
The operating
words in this letter are the
following:-
“We
hereby undertake and guarantee
that payment for the above
order in the amount of
¢500 million when due will be
made in the joint names
of Ahaman Enterprises
Limited/NDK Financial
Services Limited.”
Again, in
exhibit K, dated 28th
September 2005, a similar letter
just as the one referred to
supra was written by the
Ministry of Energy to the
Managing Director of Ahaman
Enterprises Limited and copied
to the Plaintiffs herein.
The operative
part of this exhibit also states
as follows:
“We hereby undertake and
guarantee that payment for the
above order in the
amount of ¢1.8 billion when due
will be made in the joint
names of Ahaman Enterprises
Limited/NDK Financial
Services Limited.”
It is to be
noted that both letters were
signed by the Chief Director and
the Principal Accountant, all of
the said Ministry.
The
Defendants at this stage
purportedly kept faith with
their undertakings and
guarantee’s and to further show
their commitment to the
Plaintiffs, wrote exhibit V,
dated 2nd February
2006, addressed to Ahaman
Enterprises and copied to the
Plaintiffs.
This letter
states as follows:
“National
Electrification Scheme – Payment
of Invoices for Haulage
Reference our
letter dated 13th
October 2005. After paying
¢153,781,842.42 with cheque No.
141979 dated 2nd
February 2006 to Ahaman
Enterprises Limited, the
outstaying payment is ¢4.5
billion cedis.
We wish to
confirm that until further
advice by NDK Financial Services
Limited we will continue to make
all payments in the joint names
of Ahaman Enterprises
Limited/NDK Financial Services
Limited”. Emphasis supplied
The above
constitute sufficient assurances
by the Defendants to the
Plaintiffs that to all intents
and purposes they intend to be
bound by their own undertakings
and guarantee’s spelt out in
their previous correspondence on
the matters germane to this
case.
It was after
the above letter was written
that, the Defendants by another
letter from the Ministry of
Energy, dated 27th
April 2006 signed this time by
the Principal Accountant, and
marked in the appeal record as
exhibit Z was addressed to the
Plaintiff’s and copied to Ahaman
Enterprises. This letter reads
as follows:-
“National
Electrification Scheme – Payment
of Invoices for Haulage – Messrs
Ahaman Enterprises Limited
Reference our
letter dated 13th
October 2005. We wish to confirm
that the outstanding amount the
Ministry of Energy owes Ahaman
Enterprises Limited on the above
contract is ¢6.3 billion as at
27th April 2006.
We further
wish to confirm that we will
continue making the interim
payments as and when funds are
available, until mid June 2006
when we expect to make a bulk
payment of at least ¢2.5
billion. It is expected that
this whole balance is
outstanding (i.e. excluding new
invoices) will be paid off by
the end of the 3rd
quarter of the year at the
latest.
Finally, as
already undertaken, we will
continue to make all payments in
the joint names of Ahaman
Enterprises Limited/NDK
Financial Services Limited until
otherwise advised by both
parties.” Emphasis supplied
It is to be
noted that, the above letter is
not different from an earlier
one also authored by the
Ministry of Energy dated 2nd
February 2006 and marked as
Exhibit DD in the appeal record.
The
Plaintiff’s from their conduct
are to be understood to have
taken the said letters and their
contents very serious and indeed
acted upon them. As a matter of
fact, in all the loan agreements
executed between the Plaintiffs
and Ahaman Enterprises, the said
letters of undertaking and
guarantee were incorporated as a
critical security consideration
for the grant of the loan.
For example,
in exhibits, E & F, the letter
of undertaking and guarantee
dated 19th August
2005 was listed as one of the
items of security by the
Plaintiff’s and Ahaman in
addition to landed property of
Mr and Mrs. Peter Agbezudor at
North East Kwashieman.
Reference is
also made to the loan agreements
marked as exhibits L and P in
which the letters of undertaking
and guarantee from the Ministry
of Energy dated 19th
August and 28th
September, 2005 respectively
were all listed as being the
security considerations of the
Plaintiff’s, for the payment of
the debt of Ahaman which then
stood at ¢1.9 billion.
We have
indeed observed and noted that
similar references and
incorporation has been done in
all the loan agreements executed
between the Plaintiff’s and
Ahaman Enterprises and all have
been captured in the appeal
record and taken into
consideration by the learned
trial Judge.
Based on all
the pieces of evidence which are
all documentary, it is clear
that the learned trial Judge had
all the material before her to
resolve the issues she
formulated for the resolution of
this dispute in favour of the
plaintiffs.
This is
because, from the evidence, the
following scenario stands out
clear:
1.
That the Plaintiffs relied
heavily on the Ministry of
Energy’s letters dated 19th
August 2005 and 28th
September 2005 and the other
subsequent dates to
approve, advance and
disburse the various amounts
to Ahaman Enterprises at the
interest rates specified
therein.
2.
That, from the letters referred
to supra by the Ministry of
Energy, dated 19th
August, 2005, 28th
September 2005, 13th
October 2005, 2nd
February 2006 and 27th
April 2006, the Ministry
unequivocally and
unconditionally agreed to
pay all the proceeds of the
haulage contracts in
the joint names of the
plaintiffs and Ahaman
Enterprises.
3.
Finally, that the Defendant’s
herein have defaulted in the
terms of payment they
themselves proposed to the
plaintiff’s in the letters
referred to supra.
From the
above, the plaintiffs should
have been entitled to their
reliefs against the Defendants
herein as well. Fortunately, the
Court of Appeal has reversed and
set aside that erroneous
position taken by the trial
court.
The Court of
Appeal stated in the following
clear and concise language why
they reversed the decision of
the learned trial court:-
“With all due respect to the
trial Judge we do not share her
view that the undertaking
contained in Exhibit D is “a
letter of comfort”, not intended
to be legally binding on
Ministry of Energy, but only
give rise to moral
responsibility only unless shown
otherwise. I will quote the
relevant portions of
Exhibits C, D, DD and V to see
whether the parties intended to
create a legal relation. Exhibit
D is a letter from Ministry of
Energy to the Managing
Director, Ahaman Enterprises
Ltd. (1st defendant)
and copied to The Chief
Executive, NDK Financial
Services Ltd, Accra dated 19th
August 2005. “
From the
narration of the facts of this
case as has been captured by
documentary evidence, it is
clear that there is overwhelming
evidence that the relationship
that the Ministry of Energy’s
letters created between them and
the Plaintiffs and Ahaman
Enterprises cannot be anything
but legal relationship.
We have also
taken note of the use of the
words undertaking and guarantee
by the Ministry of Energy in the
context in which they have been
used and agree perfectly with
the conclusion reached by the
Court of Appeal as follows:-
“From the definitions quoted
supra, the guarantor becomes
liable for the debt or
default of another. This makes
business sense. Secondly, a
court of equity will not permit
a default party to take
advantage of its own
negligent act or default or a
court of conscience
will never allow a man to profit
by his own fraud. Better
still no man should be permitted
to take advantage of
his own wrong. See the
Court of Appeal cases of
Republic v Kumasi
Traditional Council; Ex parte
Opoku Agyeman II [1977] 1
GLR 360; Mahama v
Soli [1977] 1 GLR 215, 237 and
Ndoley v Iddrisu [1979] GLR
559, 565. These cases were cited
with approval in the
Supreme Court case of Attieh v
Koglex [GH] Ltd.
[2001-2002] SCGLR 936, 944.”
Indeed it
will be a mockery and a travesty
of justice for a Ministerial
Department of State, to be
permitted to use such words as
have been contained in the
various letters under reference,
upon which a non-banking
financial institution, like the
Plaintiffs acted, and when it
matters most, be construed as a
“letter of comfort”. This
is considered as erroneous.
Words used in
correspondence such as those
under reference, especially when
construed against the background
of the purposes for which they
were written, and the uses to
which they have been put, it is
submitted should have put all
key stakeholders on guard to
ensure that the legal
relationship that had been
created between the parties
cannot be wished away by the
stroke of another letter without
legally undoing what had been
created under the previous
letters. For instance, by the
letter of 27th April
2006, the Ministry had
clearly stated that, its
position on the payment of the
proceeds of the haulage contract
would continue to be in the
joint names of the Plaintiffs
and Ahaman Enterprises and any
change can only be effected by
both parties consenting to the
same.
However, as
later events unfolded, i.e. the
Ministry of Energy’s letter of
17th December, 2008
which advised the Ministry of
Finance and Economic Planning to
effect payment to Ahaman
Enterprises alone in the sum of
GH¢268,250.52, showed clearly
that, the Defendants were in
breach of what has been agreed
upon.
This was
followed up by the Ministry of
Finance and Economic Planning
letter dated 6th
January 2009 and marked as
exhibit DD2 which clearly
epitomized the breach by the
Defendants of their undertaking
and guarantee to the plaintiffs.
The decision
by the Ministry of Energy, to
bypass the laid down procedure
for payment of cheques arising
from and due under the haulage
contracts in the joint names of
the Plaintiffs and Ahaman
Enterprises Limited, constituted
a serious breach of the
undertakings and guarantees
therein contained for which
legal consequences arise.
This conduct
by itself is not only in breach
of the said undertaking as
stated supra, but smacks of
conduct that is arbitrary and
is frowned upon by this court.
For proof of
this breach by the Defendants,
see the following which is
contained in a quotation from
the appeal record as well as the
judgment of the Court of Appeal.
“From the
record of appeal, the official
from Ministry of Energy, Mr.
Chris Anaglo admitted that
Ministry of Energy gave an
undertaking to make payments due
the defendant in the joint names
of Ahaman/NDK Financial
Services Ltd. and in fact went
ahead to make some payments in
the joint names of the plaintiff
and 1st defendant.
See the evidence 1st
defendant’s witness Chris Anaglo
at page 91 of the record of
appeal. He said:
Q.
“Now apart from the issuing of
invoices concerning this
contract, was there
any special agreement as to the
mode of payment?
A. Yes
there was a special mode of
payment
Q.
What was it?
A.
There was a Memorandum of
Understanding between the
Ministry of Energy and
Ahaman Enterprises Limited that
when payments are due,
cheques will be written in the
joint name of Ahaman Enterprises
Limited and NDK Financial
Services.
Q. So
did you pay all cheque as
contained in the MOU?
A. Yes
my Lord, most payments were made
in the joint name of Ahaman
Enterprises Ltd and NDK
Financial Services Ltd but some
were not made in the joint
name of Ahaman Enterprises
Limited and NDK Financial
Services because besides the
Memorandum of Understanding
between the Ministry of
Energy and Ahaman
Enterprises Ltd that payments
due Ahaman should be made in
the joint name of Ahaman
Enterprises Ltd and NDK
Financial Services and other
financial institutions which
also gave facilities to
Ahaman under the same contract.
So whenever a payment is due
to Ahaman Enterprises Limited,
the Ministry contacted
Ahaman and Ahaman
advise the Ministry how the
cheques should be
written. Either in the name of
Ahaman Enterprises Limited and
NDK or Ahaman Enterprises
Limited and the other financial
institution that gave
facilities to Ahaman under the
same contract”
From the
above, there is sufficient
justification for the Court of
Appeal to have concluded on this
matter as follows:-
“From the evidence of the
official of Ministry of Energy,
the Ministry gave an
undertaking to effect payment on
the haulage contract in the
joint name of Ahaman and
NDK Financial Services when same
became due. Exhibits DD and
DD1 confirmed this. Therefore
when the official from the
Ministry of Energy
admitted in cross examination
that they made some
payments of money under the
haulage contract to Ahaman
Enterprise alone, the
Ministry was in breach of the
undertaking to make payments in
the joint names of
Ahaman Enterprises Ltd and NDK
Financial Services Ltd.
The trial judge in her judgment
made a finding of a fact that
the Ministry of
Energy was in breach of the
undertaking but held that since
the plaintiff did not provide
consideration for the contract
it cannot claim any benefit
from it. This position
is not tenable. The Contracts
Act, 1960 Act 25,
section 10 thereof deals with
the law on consideration and it
provides as follows:-
“A promise is not invalid as a
contract by reason only that the
consideration for the promise is
supplied by a person other than
the promisee.”
This means
quite clearly that the
consideration need not move from
the promisee to validate the
contract.
The
provisions of section 10 of the
Contracts Act 1960 Act 25,
referred to by the Court of
Appeal really puts the matter
beyond peradventure.
The promise
in this case has been provided
by the Ministry of Energy, i.e.
the Defendants. By the said
provisions, the contract entered
into between the Ministry and
Ahaman on the one hand for the
haulage contracts and between
the plaintiffs and Ahaman
Enterprises for the various loan
agreements advanced by
Plaintiffs to Ahaman Enterprises
has not been invalidated by the
fact that the consideration in
respect of those contracts had
been supplied by a person other
than the promisee.
It is in
circumstances like this that we
observe the usefulness and
progressive nature of our
Contracts Act, 1960, Act 25.
With the
above exposition of the facts
and the law, there is no doubt,
that the resolution of the
solitary issue formulated by
this court as arising from the
grounds of appeal and the
statements of case of the
parties is resolved in the
affirmative and in favour of the
plaintiffs herein.
This is to
the effect that, the letters of
undertaking and guarantee
written by the Ministry of
Energy to the Plaintiffs and
Ahaman Enterprises constituted
sufficient legal basis for the
Court of appeal’s decision to
the effect that the Defendants
herein, and Ahaman Enterprises
Limited, (1st
Defendants therein) pay the
Plaintiffs, all sums, (together
with interest, at the rate of
6.5% per month) paid to Ahaman
Enterprises by the Ministry of
Energy to date of filing the
appeal in the Court of Appeal.
The net
result is that, the appeal
herein fails and is accordingly
dismissed.
In its place,
the Court of Appeal judgment, of
28th March 2013 is
hereby affirmed as follows:-
1.
The appellant is asking the
Ministry of Energy to render
accounts of all payments
made to 1st defendant
under the haulage contract from
19th August
2005, up to date of filing this
suit and we so order. This
Account is to be
rendered by the current Chief
Director and The Principal
Accountant of the Ministry of
Energy within thirty days (30)
of this order. In
coming to this conclusion we
have noted that the Plaintiffs
admit some of the payments
were made in its name jointly
with that of the 1st
defendant (Ahamah
Enterprises).The controversy
that culminated in the instant
action arose because the
Ministry of Energy paid some of
the monies due under the
haulage contract to Ahaman
Enterprises Limited alone.
2.
From the Plaintiff’s writ of
summons, it is also seeking a
consequential order that
defendants herein pay to it all
sums together with interest at
the rate of 6.5% per month paid
to 1st defendant,
Ahaman Enterprises Limited by
the Ministry of Energy in
contravention of the letters of
undertakings dated
19th August 2005, 22nd
September 2005, 13th
October 2005, 2nd
February 2006, 27th
April 2006 to date of filing the
appeal in the Court
of Appeal. We will grant the
Plaintiffs prayer except to add
that all the sums due
under the haulage contract
together with interest at 6.5%
per month that were paid
to the 1st defendant
in contravention of the
letters of
undertakings after the Accounts
had been rendered by the
Ministry of
Energy should be paid jointly by
Ahaman Enterprises and the
defendants herein
to the Plaintiffs.
(SGD) J. V.
M. DOTSE
JUSTICE
OF THE SUPREME COURT
(SGD) G. T. WOOD
(MRS)
CHIEF JUSTICE
(SGD) J. ANSAH
JUSTICE OF THE SUPREME COURT
(SGD)
P. BAFFOE BONNIE
JUSTICE
OF THE SUPREME COURT
(SGD) J. B. AKAMBA
JUSTICE OF
THE SUPREME COURT
COUNSEL
SYLVIA A.
ADUSU (MRS) ESQ. CHIEF STATE
ATTORNEY FOR THE 2ND
DEFENDANT /RESPONDENT/APPELLANT.
PEASAH BOADU
ESQ. FOR THE
PLAINTIFF/APPELLANT/ RESPONDENT. |
