HOME   UNREPORTED CASES OF THE SUPREME

                                    COURT OF GHANA 2003

 

 

IN THE SUPERIOR COURT OF JUDICATURE

THE SUPREME COURT

ACCRA

___________________________

CORAM:        ACQUAH, J.S.C. (PRESIDING)

  ATUGUBA, J.S.C.

                                                                             ADZOE, J.S.C.

BADDOO, J.S.C.

  DR. TWUM, J.S.C.

CIVIL APPEAL NO. 16/2001

5TH MARCH, 2003

OWUSU KYENKYENHENE       …     PLAINTIFF/APPELLANT/APPELLANT

VRS

J. K. ADU                                   …      DEFENDANT/RESP./RESPONDENT

 

___________________________________________________________________________________

JUDGMENT

ADZOE, J.S.C.

This is an appeal against the unanimous judgment of the Court of Appeal dated 14th December, 2000 affirming an award made by the trial High Court at Kumasi on 22nd January, 1999. This High Court Judge made the award pursuant to his own previous order for the valuation and sharing of the assets and liabilities of a school owned jointly by the parties. The appellant contends that the properties of the school had not been “professionally or otherwise valued” before the award was made by the High Court and that the Court of Appeal was wrong in affirming the said award.

The dispute between the parties was primarily about the ownership of a school established in Kwadaso, Kumasi, in the Ashanti Region and called the Minnesota International School. It was originally established by four men in 1982. In 1984, two of the four founders decided to quit, and the parties herein were left to run the school as joint owners. The plaintiff in the suit is the appellant before us and the defendant is the respondent. I shall hereafter refer to them as Appellant and Respondent. They were the two left behind to run the school. They entered into a partnership agreement and registered the school in their joint names as owners.

The appellant became the Headmaster of the school, and the Respondent took the office of Financial/Administrative manager, up to 1992.

Troubles started in about 1992 when, according to the appellant, the respondent refused to render accounts and claimed to be the sole owner of the school.

When matters came to a head, the appellant sued the respondent on 10th May, 1994 at the High Court in Kumasi, claiming a “declaration that the plaintiff and the defendant jointly own” the school.

The trial High Court Judge gave judgment for the appellant and held that the parties jointly owned the school and that they owned it “in equal shares based on the capital contribution of ¢50,000.00 each” as provided in the partnership agreement. Exercising his discretion under Order 63, rule 6 of the High Court (Civil Procedure Rules, the learned judge made the following order:

“Furthermore, I hold that the assets and liabilities of the parties were to be shared in equal proportions.

From the evidence above it is quite clear to me that the parties cannot continue to operate as a partnership at will and order that the partnership be wound-up and the assets and liabilities of the partnership shared as provided for under clause 8 of Exhibit I”.

Exhibit I is the partnership agreement. In order to ensure a fair sharing of the and liabilities the learned High Court judge further made an order that:

"The parties are to appoint competent experts to evaluate the assets and liabilities and same be distributed to the parties in equal shares under the supervision of the court".

There is no evidence in the record of proceedings that any valuation of the "assets and liabilities" of the school was ever made by "competent experts" appointed by the parties as envisaged by the court's order.

A valuation properly so-called demands of the valuer to find out the reasonable value of the tangible assets involved in the exercise. There must be clear evidence that each property was valued at a price which it would have fetched at the time of the valuation on a sale in the open market between a notional buyer and a notional seller; the open market in the present case may be confined to Kumasi or the Ashanti Region since the properties are in Kumasi. In a case like the one before us where a valuation is needed for the particular purpose of having the total value of the assets shared equally between the parties, I consider that any valuation must be transparent and prima facie fair.

In the instant case, however, there is absolutely no evidence of a valuation. The school's Accountants, Messrs M.A. Darko & Co. filed before the court on 29th September, 1998, what purported to be financial statements of the school, which statements are clearly not valuation reports. Prior to the financial statements Nii Quaye-Mensah & Associates on 17th November, 1997 had also filed what they themselves labelled an "Inventory". This "Inventory" merely listed certain properties allegedly owned by the school and did not place any value on them.

The appellant even took objection to the "Inventory" for reasons that (i) it did not reflect the school's accounts, (ii) it included the defendant's own Peugeot Pick-up which was not the property of the school and (iii) that it did not include text-books and science equipments of the school. This protest by the plaintiff was contained in an affidavit filed before the court on 18th November, 1997.

Before the 20th of November, 1997, the Registrar-General had been appointed as the Trustee and official Liquidator. On 17th November, 1997, one Mr. Joseph Tamakloe, an officer of the Registrar-General's Department, acting on behalf, and on the authority, of the Registrar-General, swore to an affidavit in which he deposed that to the best of the knowledge of the Registrar-General "the total school fees for a term is about ¢28,000,000.00" and that school fees for the third term of the 1996/97 academic year and the 1st term of the 1997/98 academic year had already been collected by the teachers of the school. It cannot be doubted that these fees were collected by or at the instance of the respondent.

On 20th November, 1997, the Registrar-General was discharged as the official Liquidator and the Registrar of the court was appointed to divide the assets listed in the "Inventory" filed by Messrs Nii Quaye-Mensah and Associates to the parties in equal shares. Both parties did not permit this division to be carried out. After some time, respondent offered to "pay the appellant out completely in the sum of ¢5,000,000.00 (Five million cedis) cash". When this offer reached the appellant he, on the other hand, demanded to be paid ¢287,475,352.50 as his half share of the assets.

It was at this stage that the High Court called the case on 22nd January, 1999 and ordered that the appellant be paid ¢8,000,000.00 as his share. It is clear that when on that 22nd of January, 1999, the High Court judge made the order he had no valuation figure of the assets to guide him, and the record shows that he did not even advert his mind to the valuation he himself had ordered. I think it would be fair to the parties and the Learned High Court Judge as well as the learned Justices of the Court of Appeal to reproduce what the learned High Court judge said:

"By Court:  After hearing given the parties ample time to settle the quantum of money payable to the plaintiff an income due to the School up to the date of the judgment. It seems quite clear that the movable items inventoriesed have been apportioned among the parties. The bone of contention that is entitled to ¢9,656,520.00 and a further income of ¢256,713,832.50.

There is no evidence whatsoever at the trial or from the audited account in proof of this monstrous demand. Since this court is not a goldmine, I order that the defendant pays the sum of ¢8,000,000.00 to the plaintiff forthwith".

The learned High Court Judge might have thought that he had an unfettered power to award the appellant any sum of money he considered proper in the circumstances. But he was mistaken. He had no such power. I would agree with counsel for the appellant when he described the award as "capricious" in the sense that it was arbitrary and unreliable as the actual half share of the assets and liabilities of the school. To that extent the appeal must succeed on ground one of the appeal which is that:

"The Court of appeal erred when it affirmed the decision of the High Court without critically examining the evidence contained in the record of proceedings".

I myself cannot imagine how the Court of Appeal came to the conclusion that the High Court "took into account the realities on the ground by awarding ¢8,000,000.00 as the appellant's share of the assets ..."  I will therefore allow the appeal.

The appellant has urged this court to set aside the award and order a more equitable sharing of the assets of the school based on an effectual valuation. The declared intention and desire of the trial High Court is that the properties be valued by experts and the amount determined be shared between the parties "in equal proportions". Since no valuation had been done, I think the appellant's request is in order.

The appeal is allowed. The judgment of the Court of Appeal and the order of the High Court, Kumasi, dated 22nd January, 1999, awarding ¢8,000,000.00 to the appellant as his share are hereby set aside.

The case should be remitted to the trial court, Kumasi, for a professional valuer to be appointed to carry-out the valuation ordered by the court for the purpose of a fair sharing between the parties as ordered by the High Court.

T. K. ADZOE

JUSTICE OF THE SUPREME COURT

BADDOO,  J.S.C.

The facts which gave rise to the appeal are as follows:—

The Plaintiff/Appellant and the Defendant/Respondent, herein after, shall be called the Plaintiff and Defendant respectively, with two other persons, established a school on Plot 15 Block B, Kwadaso, Kumasi sometime in 1982. The land belonged to the Defendant, who already had built an out-house, popularly or locally known in Ghana, as Boys Quarters, on the land. This was rented out to the school and was used as offices, while classes were conducted in wooden structures constructed on the vacant plot.

In 1984, the two other persons who started the school with the Plaintiff and Defendant in 1982, left the school.

In the same year, the Plaintiff and Defendant entered into a partnership agreement under Act 125 of 1962, to run the school named the Minnesota International School, as a commercial venture. The school was registered with the Ministry of Education and the Ghana Education Service. All the relevant documents with regards to the establishment and the registration of the school were signed by the Plaintiff and Defendant.

For the next 8 years the Plaintiff and the Defendant jointly managed the school; Plaintiff in the role as headmaster, while the Defendant managed the financial and administrative side of the school. As a commercial venture, the income of the school in 1993 for the term was over ¢33 million.

In 1994, Plaintiff invited the Defendant in his capacity as financial and Administrative Manager of the school, to render accounts of the financial position of the school.

The Defendant refused and claimed the school as sole owner. Plaintiff was consequently barred from entering the school by the Defendant from 20th  June,1994.

Plaintiff therefore issued a writ at the High Court Kumasi for "a Declaration that the Plaintiff and the Defendant jointly owned the Minnesota International School, Kumasi".

JUDGMENT OF THE HIGH COURT

This case has had a chequered career at the High Court since 1994.

First it came before Justice P.K. Owusu Sekyere on the 11th of July 1994, when he took the summons for Directions and set the case down for hearing on 7/12/94.

Thereafter there were series of adjournments until 7/7/95 when counsel for the Plaintiff asked for an adjournment to enable the parties settle the matter. The case was then adjourned to 18/10/95.

There was no further hearing till the 16th  of January 1996 when it was called before a new judge Justice ABADA. He adjourned the case to 14/2/96 for hearing.

Finally on 8/3/96, hearing commenced before the new judge Justice ABADA. On the 2nd of July 1996, the trial judge gave judgment for the Plaintiff as follows:—

"In my judgment, the Plaintiff has succeeded in establishing by cogent prima facie evidence, that the parties agreed to form a joint partnership and the object of that partnership was to establish the Minnesota International School. I further hold that the parties own the school in equal shares, based on the capital contributions of ¢50,000 each. Furtherance, I hold that the assets and liabilities of the parties are to be shared in equal proportions. From the evidence above, it is quite clear to me that the parties cannot continue to operate as a partnership at will and therefore in exercise of the powers conferred on the court, I order that the partnership be wound up and the assets and liabilities of the partnership shared as provided for under clause 8 of Exh. 1. The parties are to appoint competent experts to evaluate the assets and liabilities and same to be distributed to the parties in equal shares under the supervision of the court".

LIQUIDATION.

On the 27th of August, 1997, the Registrar of the High Court was appointed an Official Trustee. He was to appoint an official liquidator to wind up the partnership under section 47(5) of Act 152.

Then on the 4th of December, 1996 the Registrar General was appointed as a Trustee and  Official  Liquidator, to wind up the affairs of the Minnesota International School.

On the 24th of February 1997, the Defendant filed a motion, to compel the official liquidator to expedite the liquidation of the partnership. In his affidavit in support the Defendant averred that the liquidator had abandoned his duty of winding up the Partnership and has constituted himself into a self-appointed proprietor, managing the school.

But one CHRISS KUMASS of the Registrar General's Department in an affidavit dated 5/3/97 in opposition to the application by the Defendant, swore that it was rather the Defendant who was frustrating the liquidation of the school, by failing to furnish the official liquidator with the proper accounts for the period 1994, 1995 and 1996.

On the 23rd May 1997, in the absence of the official liquidator and counsel for the Plaintiff, the court granted the Defendant's application for expeditious liquidation and gave the official liquidator 21 days to complete the liquidation of the school.

On the 10th of Nov. 1997, one Tamakloe of the Registrar General's Department filed an affidavit to which was attached an Inventory of the properties of the Minnesota International School. The Inventory included 789 Desk Table and 938 classroom chairs.  The Inventory also showed that the total fees collected for the 3rd term of the academic year 1996/97 was ¢28 million, while the fees for the academic year 1997/98 had been collected by the teachers.

On the 18th of Nov. 1997, the Plaintiff filed an affidavit protesting against the inventory filed on 17/11/97. He claimed that the inventory did not include the school text books, the science equipments and the population of the school.

The Registrar of the High Court Kumasi was mandated to divide the assets of the school according to the agreed terms of 50%-50% between the Plaintiff and the Defendant.

Again the Plaintiff protested in another affidavit dated 6/1/98 that the inventory did not include, the accounts of the school from 1988 and all the school fees collected at the beginning of the school. Plaintiff claimed that since the school was owned jointly by him and the Plaintiff, all assets including all the school accounts should be divided between them.

He filed another affidavit on 21/1/98 in which he averred that the school fees and the classrooms, particularly, Primary and JSS should be included in the inventory and these should be valued, so he could receive his share.

The parties could not agree on a formula for the distribution of the assets of the Partnership and the matter was adjourned by the court several times, from January to September 1998.

On the 22/9/98, the Defendant filed an affidavit in which he offered to buy off the Plaintiff by paying him the sum of ¢5 million as a final settlement of his share in the Minnesota International School.

The Plaintiff rejected this offer by the Defendant and insisted that the judgment of the court be carried out.

Then on the 7th of Dec. 1998, the Plaintiff also filed an affidavit in which he set out his conditions for the settlement of the matter. These included the following:—

Salary Allowance due the Plaintiff       =        ¢   9,656,520

50% of all assets                                   =           21,375,000

50% of Net Income                               =         256,713,832.00

Total                                                      =       ¢287,745,352.50

Defendant responded to the Plaintiff's offer on 11/12/98 by stating that the chop boxes and chairs were to be shared 50% - 50%.

That there was no salary due to the Plaintiff and that the balance as at 23/9/97 was

                                                  =        ¢888,255

                                                  =        ¢444,112.50

Confronted with this avalanche of affidavits and claims and counter claims, the trial judge decided that since the parties could not come to a settlement, the court must settle the matter.

Consequently on 22/1/99, the court awarded the Plaintiff the sum of ¢8 million as his share of the Partnership.

APPEAL

The Plaintiff dissatisfied with this order, appealed to the Court of Appeal against the judgment of the High Court.

The Court of Appeal on 14/12/2000, dismissed the appeal and affirmed the judgment of the High Court.

The Plaintiff dissatisfied with the decision of the Court of Appeal, has appealed to the Supreme Court on two grounds of appeal on 22/1/2001.

1.  That the Court of Appeal erred when it affirmed the decision of the High court without critically examining the evidence contained in the record of proceedings.

2.   The Court of appeal erred when it did not order the assets of the school to be shared equally.

MATTERS FOR DETERMINATION

Before I deal with the grounds of appeal, let me look at the judgment of the trial court and the order which was made by the trial judge. At P.70 line 25, the trial judge said:-

"From the evidence above, it is quite clear to me that the parties cannot continue to operate as a partnership at will and therefore in exercise of the powers conferred on the court, I order that the partnership be wound up and the assets and liabilities of the partnership shared as provided under clause 8 of Exhibit 1."

From this judgment it is clear, unambiguous and unequivocal, that the assets and liabilities of the school are to be shared in equal proportion between the Plaintiff and Defendant.

The question to be answered is whether the award of ¢8 million to the Plaintiff by the court represent 50% share of the assets of the Minnesota International School.

By this award however the trial court had actually assessed the value of the school to be worth ¢16 million.

But the report on the Financial Statement of the school for the period ending 1994 to July 1996 prepared by one Eric Orlando, the Accountant of the High Court Kumasi, indicated that the statements were not complete because the officer did not have access to all the relevant documents he needed to prepared the statements.

On p.121, the report read:—

"However the documents provided us by the official liquidator is inadequate and most related to period between 1985-1994. I.e. does not fall within the period in question. No class list to assess the number of pupils in the school and the amount paid as school fees. The amount paid as teachers salaries and other expenses are also not known. However balance sheets relating to the period 1994 to June 1996 which were prepared by the Darko & Company Chartered Accountancy firms in Kumasi which were used to prepare the school, accounts were shown to us for study. We therefore attach copies of the said accounts for your study and advice, since the materials used in preparing the said accounts were not made available to us, to enable us prepare our own accounts as requested. In the summary we cannot prepare any meaningful Financial Statement to show the true income and expenditure position of the school for the periods 1994, 1995 to July 1996 as requested".

In the face of this honest admission by the Accountant that no meaningful financial statement could be prepared to show the true income and expenditure position of the school for period 1994, 1996 and 1996, it will be difficult, to put it rather mildly, to resist the argument of the Plaintiff that the award of ¢8 million was not based on any accepted proof and therefore was not fair.

The Plaintiff in his affidavit dated 29/8/94, had stated that the Defendant barricaded the door; to his office in August 1994, thus preventing him from working in the school as the headmaster.

In response Defendant admitted barricading the door but claimed that he was justified in doing so.

Plaintiff therefore claimed that since he was barred from entering the school in August 1994, he had not received any salary or allowance up to the end of 1996. This has not been denied by the Defendant.

Since the Plaintiff and Defendant are joint owners of the school, then Plaintiff is legally entitled to his salary and allowances from the period he was barred from entering the school up to 1996.

In awarding the sum of ¢8 million to the Plaintiff as a final settlement of his share in the school, did the court take this factor in consideration?

There is no evidence on record to indicate that the trial court took this element into account when making this award.

The Court of Appeal said at P.175 of the record, that the trial court took into account the realities an the ground by awarding ¢8 million to the Plaintiff as his share of the assets of the partnership.

These "realities on the ground" were never defined, nor were we told what element constituted these realities on the ground.

The judgment of the trial court made it abundantly clear that the assets and liabilities of the school were to be shared equally between the Plaintiff and the Defendant. There is therefore no legitimacy for using any other formula as a basis for sharing the assets of the school.

On P.31 of the record, the Defendant stated on Exh. 'M' in an information on Private Schools that the number of pupils on roll was 1042.

Plaintiff claimed in an affidavit on 17/11/97 that the school fees collected per term was ¢28 million. Plaintiff further claimed that Defendant was still running the school with the same pupils, because it was not possible to divide the pupils into two equal shares.

Since Plaintiff was entitled to 50% of the pupils, the court ought to have taken this into consideration in making the award for ¢8 million. There is no evidence that the court took this factor into account in making the award.

DISCRETIONARY POWERS

Counsel for the Defendant submitted that the learned judge was exercising his judicial discretion when he awarded the Plaintiff the sum of ¢8 million as his half share of the school. That being an exercise of judicial discretion, this court ought not to interfere with the decision of the court.

It is a long settled principle that discretionary powers must be exercised fairly. In general it implies a duty to be fair and to observe the elementary rules of natural justice for a limited purpose in the exercise of the functions that are not strictly judicial but administrative.

It is my considered opinion that in the matter before this court, the exercise of the trial judge's discretion was an administrative function which could have been done by the official liquidator if he had been allowed to do his work.

A critical examination of the record shows clearly that the trial judge had not been fair in the award of ¢8 million to the Plaintiff as his share of the assets of the school.

First, the trial judge failed to take into consideration the fact that the Plaintiff was barred from the school in August 1994 and therefore he did not receive any salary or allowance from that time up to the end of 1996. Since the Plaintiff is a joint owner of the school with the Defendant, as the court itself had found, he was entitled to some of the proceeds of the school from 1994 to 1996.

Secondly the total population of the school, 1042 remained with the Defendant even after the winding up. The Plaintiff is entitled to be paid something for this. There is no evidence that this was even remotely considered in the award paid to the Plaintiff.

Thirdly the Financial Statement of the school could not be prepared to reflect the true income and expenditure position of the school for 1994, 1995, 1996. That being the situation, the trial judge was not in any position to share the assets of the school equally between the Plaintiff and the Defendant. Any exercise of discretion by the judge in that respect was bound to be arbitrary, capricious and uninformed.

The Constitution under Article 296 states:—

"Where in this constitution or in any other law discretionary power is vested in any person or authority.

(a)    That discretionary power shall be deemed to imply a duty to be fair and candid.

(b)   The exercise of the discretionary power shall not be arbitrary, capricious or biased either by resentment, prejudice or personal dislike and shall be in accordance with due process of law.

It is my considered opinion that the award of ¢8 million to the Plaintiff as his share of the assets of the Minnesota School was not fair and was not based on any clear principles.

In the case of TRAABOULSI V. PATTERSON ZOCHONIS [1973] 1GLR 133, Azu Crabbe held that where a judge of first instance misapprehends the evidence in the exercise of his discretion this will be sufficient justification for interference by the appellate court.

In JENKINS V. BUSHBY [1891] 1 CH KAY L.J. said:—

"In a question of discretion, authorities are not of much value. No two cases are exactly alike and even if they were, the court cannot be bound by a previous decision to exercise its discretion in a particular way, because that would be in effect putting an end to the discretion".

But in Charles Osenton & Co. v. Johnson [1942] AC 130 Viscount Simon L.C. said—

"The law as to the reversal by a Court of Appeal of an order made by a judge below in the exercise of his discretion is well established and any difficulty that arises is due only to the application of well established principles in an individual case. The appellate tribunal is not at liberty merely to substitute its own exercised by the judge. In other words appellate authorities ought not to reverse the order merely because they would themselves have exercised the original discretion, had it attached to them, in a different way. But if the appellate tribunal reaches the clear conclusion that there has been a wrongful exercise of discretion, in that no weight, or no sufficient weight has been given to relevant considerations, such as those urged before us, by the appellant, then the reversal of the order no appeal may be justified".

It is my considered opinion that the trial judge did not only misapprehend the evidence, but failed to give critical considerations to relevant issues, in the exercise of his discretion.

I am not unaware  of the principles governing appeals against concurrent finding of fact by two lower courts, as in the present case.

In ACHORO and another v. AKANFELA AND Another [1996-97] SCGLR 209 and OBRASIWA V. OTU [1996-97] S.C. GLR 618 the Supreme Court held among other things that:—

"In an appeal against findings of facts to a second appellate court, like this court, where the lower court had concurred in the findings of the trial court, especially in a dispute, the subject matter of which is peculiarly within the bosom of the two lower courts or tribunals, this court will not interfere with the concurrent findings of the lower courts, unless it is well established with absolute clearness that some blunder or error resulting in a miscarriage of justice is apparent in the way in which the lower courts dealt with the facts".

This principle does not apply to the present case before the court, because the decision of the trial court was not based on a findings of fact, nor did the appellate court confirm a findings of act by the trial court.

The decision or judgment of the court was an exercise of the discretion of the trial judge, which exercise was confirmed by the Court of Appeal.

The criticism levelled against the judgment was that the trial judge was not fair in the exercise of his discretion.

Article 296 of the Constitution requires that the exercise of discretionary power shall not be arbitrary, capricious or biased, but should be fair and candid.

I have found that the trial judge in the exercise of his discretion in awarding the Plaintiff an amount of ¢8 million as his share of the assets of the Minnesota International School which had been wound up, was not fair.

This court as the final appellate court of the land, has the jurisdiction to consider whether the exercise of discretion by the trial court was arbitrary, fair or capricious.

In the light of the foregoing, I shall set aside the judgment of the Court of Appeal and High court.

I shall order that actual value be put on all the assets of the school up to the date of winding up and same be shared equally between the Plaintiff and the Defendant. This can be done even though the old structures have been pulled down, because the records of the school should be available. Plaintiff is further entitled to any profit that accrued from the use of his half share of the assets from the date of winding up.

This also can be ascertained and quantified.

S.G. BADDOO

JUSTICE OF THE SUPREME COURT

ACQUAH, J.S.C.

I agree

G.K. ACQUAH

JUSTICE OF THE SUPREME COURT

ATUGUBA, J.S.C.

I agree

W.A. ATUGUBA

JUSTICE OF THE SUPREME COURT

DR. TWUM, J.S.C.

I agree

DR. S. TWUM

JUSTICE OF THE SUPREME COURT

COUNSEL

Mr. Kofi Addo for Appellant.

Mr. Francis Koffie for Respondent.

gso*

 

 
 
 

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