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J U D G M E N T
SOPHIA ADINYIRA (MRS) JSC:
This an appeal against the
Judgment of the Court of Appeal
dated 6 November 2008 allowing
an appeal against the judgement
of the High Court (Commercial
Division) Accra dated 27 July
2007 on the sole ground of
estoppel by res judicata. In
order to appreciate fully the
issues raised for determination
in this appeal we must look at
the history of the whole
litigation.
Background
The genesis of this appeal is
that the plaintiffs/respondents/
appellants (hereinafter
plaintiffs) are the personal
representatives of the late
Comfort Mensah a Susu collector.
The deceased in her lifetime
operated two Savings Passbooks
with Citi Savings & Loans Co.
Ltd. with Account Numbers 3838
and 8541. The Defendant/
appellant /respondent
(hereinafter defendant) changed
its name from Citi Savings &
Loans Co. Ltd. to
Intercontinental Bank (Ghana)
Ltd. The plaintiffs undertook a
reconciliation exercise in
respect of the Passbooks A/C No.
3838 and 8541 respectively with
bank statements supplied by the
defendant. According to the
plaintiffs the reconciliation
disclosed that deposits recorded
in the Passbooks did not reflect
in the bank statements. The
total amount deposited in the
Passbooks which did not reflect
in the bank statement was GH¢50,910.00,
as per paragraph 6 of their
statement of claim. They had
several meetings with the
defendant to reconcile the
passbook entries with the bank
statements but could not resolve
the issue among themselves. The
plaintiff therefore issued a
writ with suit no. BFS/3/06 at
the High Court (Commercial
Division) Accra on 23/1/2006
claiming against the defendant:
1.
An order directed at the
defendant to reconcile the
passbook entries with the
statement of accounts to reflect
the true state of the amounts
deposited in the Savings
Accounts Numbers 3838 and 8542
belonging to Comfort Mensah
(deceased) which the defendant
bank failed to capture in the
respective Bank Statements
issued to the plaintiffs by the
defendant.
2.
Interests on the amounts which
the defendant has failed to
credit the deceased’s accounts
with from the respective dates
on which they should have been
credited up to and inclusive of
the date of payment.
3.
Costs.
The defendant entered
appearance but failed to file a
defence. On 27 February 2006,
the trial Court entered a
judgment in default of defence
against the defendant on all the
reliefs claimed by the
plaintiffs. On 7 March 2006, the
plaintiffs filed an Entry of
Judgment for an amount of GH¢64,334.94
and proceeded to attach the
properties of the defendant by
way of execution. On 12 April
2006, the defendant had the
execution set aside on the
grounds that the judgment was
only an order directed at the
defendant to reconcile accounts.
The Court ordered the defendant
to comply with the judgment by
reconciling the passbook entries
with the bank statements within
7 days. Based on this order the
defendant submitted to the Court
Registry a reconciliation
report, Exhibit M, stating the
total balance in Savings Account
Number 3838 to be GH¢
105.01 and that in Savings
Account Number 8541 to be GH¢134.88
as at 28/02/2006.
The plaintiffs were dissatisfied
with this report and alleged
that the report filed by the
defendant did not reflect the
outcome of the reconciliation of
the accounts which their own
auditor had participated in with
officers of the defendant bank.
They claimed the reconciliation
team came out with an amount of
GH¢49,249.01
as due to the deceased’s Saving
Accounts. They accordingly filed
a motion on 18 May 2006 to the
High Court for the appointment
of a Court Expert under Order 26
rule 1 of C.I. 47 to do the
reconciliation. The court
refused the application on the
ground that the defendant has
satisfied the order of court and
the court was functus officio.
The plaintiffs still
dissatisfied issued a writ of
summons with Suit No.
RPC/107/2006, on 26 June 2006.
The plaintiffs whether by design
failed to mention in the
original statement of claim the
earlier case and the court
orders and the reconciliation
report produced by the defendant
pursuant to the court order.
They simply asked for the
payment by the defendant the sum
of GH
¢49,249.01with
interest and cost. It was the
defendant who raised these
antecedents as the basis for its
defence of estoppel by judgment.
It was after cross-examination
of the plaintiffs that they
amended their writ of summons
and statement of claim to
include a claim challenging the
conclusions and opinions in the
reconciliation report, Exhibit
M. The amended writ of summons
filed on 19 February 2006 was
for:
1.
Payment of the total sum of GH
¢49,249.01
by the defendant being the
monies deposited in the Savings
Accounts Numbers 3838 and 8541
belonging to Comfort Mensah
(deceased) which the defendant
bank failed to capture in the
respective Bank Statements
issued to the plaintiffs.
2.
Payment of interests at the
inter-bank rate from the
respective dates on which the
various sums of money were
deposited and recorded in the
respective Saving Passbooks.
3.
A declaration that the
unilateral opinion expressed by
the defendant in the
Reconciliation Report is
unethical and is also
inconsistent with the findings
contained therein by the
Reconciliation Team
4.
Costs.
The defendant resisted the
action on the grounds that the
issues raised by the plaintiffs
had already been determined or
could have been claimed and
determined in the previous Suit
No. BFS/3/O6, and thus the
subject matter was res judicata.
The trial Judge was of the view
that the propriety or otherwise
of the reconciliation report
raised a fresh issue for her
determination and gave judgment
in favour of the plaintiffs. The
defendant appealed to the Court
of Appeal which reversed the
judgment of the trial Court on
the sole ground that the cause
of action in the two suits was
the same and the matter was
therefore res judicata. The
plaintiffs being dissatisfied
filed an appeal to this Court on
the grounds that:
1.
The Court of Appeal erred in
holding that the cause of action
in Suit No. BFS/3/06 was the
same as the cause of action in
Suit No.RPC/107/06.
2.
The Court of Appeal erred in
mistakenly assuming that the
Court made an order in Suit No.
BFS/3/06 which a court officer
carried out by way of the
reconciliation of Accounts
Numbers 3838 and 8541 when the
facts speak to the contrary.
3.
The Court of Appeal erred in
erroneously assuming that by
initiating Suit No. RPC/107/06,
the respondents were seeking to
enforce an order of the Court in
Suit No. BFS/3/06
4.
The Court of Appeal erred in
holding that the Court in Suit
No. BFS/3/06 determined issues
between the parties.
5.
The Court of Appeal erred in
thinking that the trial judge in
suit RPC/107/06 should have
taken advantage of Order 33 of
the High Court (Civil Procedure
Rules) 2004, C.I. 47 in order to
make an order for separate trial
of issues of facts and or law
that arose in Suit No. BFS/3/06
when there was no defence to
that action.
Res judicata
The main ground which had been
hotly contested throughout this
case rested on whether the
plaintiffs’ cause of action was
caught by estoppel by res
judicata. This well established
rule of estoppel by judgment, is
based on two policy grounds,
namely that it is in the public
interest that there be an end to
litigation and that nobody
should be vexed twice on the
same matter. The plea of res
judicata has been explained in
Spencer- Bower and Turner’s
book, Res Judicata (2nd
edition) paragraph 9 at page
9, as:
“ The rule of estoppel by res
judicata… is a rule of evidence
and may thus be stated: where a
final decision has been
pronounced by a...judicial
tribunal of competent
jurisdiction over the parties
to, and the subject matter of,
the litigation, any party or
privy to such litigation, as
against any other party or privy
thereto… is estopped in any
subsequent litigation from
disputing or questioning such
decision on the merits whether
it be used as the foundation of
an action or relied upon as a
bar to any claim.” .
The judgment relied on by the
defendant before us is a default
judgment so we need to examine
the scope of the rule of
estoppel in respect of judgment
by default. The scope of the
rule of estoppel in this regard
was fully expounded by Apaloo
C.J. in delivering the judgment
of the Court in Conca
Engineering v. Moses
[1984-86]2GLR 319, we will
therefore quote extensively from
there. The eminent Chief Justice
stated at p. 324 that:
“Ordinarily, this plea is
available only after the issue
has been determined in a
contested action in which both
parties have been heard. But it
has been held to apply even in
cases where the decision was
reached in default of either
party.
In the older cases, it was
consistently held that estoppel
applied to default judgments
whether the default was in
appearance or pleading, once a
valid decision was reached. Thus
in the old case of Aslin v.
Parkin (1758) 97 E.R. 501 at
502, Lord Mansfield is reported
to have said:
“That there is no distinction
between a judgment in ejectment
upon a verdict; and a judgment
by default. In the first place,
the right of plaintiff is tried
and determined against the
defendant; in the last, it is
conferred.”
Accordingly, in an action for
mesne profits, the defendant was
held concluded by a default
judgment. All the older cases
on this subject were to the same
effect: see for instance
Nosbit v. Rishtou (1839) 113
E.R. 408; Kerr v. Williams
(1885) 29 S.J. 681 and Lockyer
v. Ferryman (1877) 2 App. Cas
519, H.L.”
However the binding force of a
default judgment is extremely
limited. Courts in all
jurisdictions sought to limit
the application of estoppel by
res judicata of judgment by
default. The learned Chief
Justice Apalloo accordingly
said:
“That a default judgment has the
same potency as estoppel as a
judgment after a contested
hearing, was the beaten track of
the eighteenth and nineteenth
century decisions. In recent
times, judges have sought to
limit the binding efficacy of
estoppel in default judgments.
Thus in New Brunswick Railway
Co. v. British & French Trust
Corporation Ltd. [1939] A.C. 1,
H.L. the House of Lords
refused to sustain a plea of
estoppel by a previous default
judgment obtained against the
respondents. In that case, Lord
Maugham who delivered the
leading speech said at 21: “…an
estoppel based on a default
judgment must be very carefully
limited. The true principle in
such a case would seem to be
that the defendant is estopped
from setting up in a subsequent
action a defence which was
necessarily, and with complete
precision, decided by the
previous judgment.”
The court held that the previous
judgment which was set up as
precluding the defendant company
was not so decided. This
decision was given in 1938.
More recently, the Privy Council
in the Malaysian case of Kok
Hoong v. Leong Cheong Kweng
Mines Ltd. [1964] 1 All E.R.
300, P.C., decided in 1964,
followed the limiting effect of
default judgment articulated by
the House of Lords. Lord
Radcliffe, who spoke for the
board on this subject said at
305:
“…a judgment by default speaks
of nothing but the fact that a
defendant for unascertained
reasons, negligence, ignorance
or indifference, has suffered
judgment to go against him in
the particular suit in
question. There is obvious and,
indeed, grave danger in
permitting such a judgment to
preclude the parties from ever
re-opening before the court on
another occasion ... whatever
issues can be discerned as
having been involved in the
judgment so obtained by
default.”
In further expatiation of the
scope of the rule, the learned
Chief Justice Apaloo observed
that:
“In Spencer-Bower and Turner
on Res Judicata (2nd
ed.) at p. 48, para. 53 the
learned authors extracted the
principle from the modern
decisions on default judgment.
They put it in these words:
“8. It seems clear from the
judgments . . . that while a
default judgment will certainly
estop the defendant from denying
that the plaintiff is not
entitled to the relief which it
has awarded to him, it cannot be
invoked to estop him by way of
issue estoppel as to any
question which is not eadem
questio . . . But if the
identical question arising in
the second action actually arose
in the first, and has been or
must necessarily be deemed to
have been decided with complete
precision one way or the other
as the foundation of the default
judgment signed by the
plaintiff, then, at least while
that judgment stands, that
question is concluded between
the parties.”(e.s)
He thus concluded:
“That, as a general statement of
the modern judicial approach to
default judgment, makes good
sense and is broadly accepted.”
It is therefore settled law that
a party is estopped by res
judicata of judgment by default
where identical issues arising
in the second action has been
directly decided in the first
action between the same parties.
The rule therefore applies even
to interlocutory matters. See
dictum of the learned Chief
Justice Georgina Wood in the
case of Republic v. High
Court, Accra (Commercial
Division); Ex parte Hesse (
Investcom Consortium Holdings SA
& Scancom Limited, Interested
parties) [2007-2008] SCGLR 1230.
We are however of the view that
for estoppel to apply in
interlocutory matters, the issue
or question involved ought to
have been conclusively
determined in one way or the
other between the parties in
the first action. The above
principles on estoppel per res
judicata have been followed by
this court in cases such as
Oforiwah v. Laryea [1984-86]
2GLR 410, In re Sekyeredumase
Stool; Nyamev. Kesse alias Konto
[1998-99] SCGLR 476, Dahabieh v.
S.A. Turqui & Bros
[2001-2002]SCGLR 498, In re
Kwabeng Stool; Karikari v.
Ababio II [2001-2002] SCGLR 15;
Analysis
In arguing the appeal, Counsel
for the appellant argued grounds
1) and 4) together namely:
“1) That the Court of Appeal
erred in holding that the cause
of action in Suit No. BFS/3/06
was the same as the cause of
action in Suit No. RPC/107/06;
4) That the Court of Appeal
erred in holding that the court
in Suit No. BFS/3/06 determined
issues between the parties”.
Based on these grounds of appeal
the issues for determination in
this appeal are whether the
causes of action in the two
suits are the same and whether
the 1st suit
determined the issues between
the parties.
‘Cause of Action’ has been
defined as:
“ ..a factual situation the
existence of which entitles one
person to obtain from the court
a remedy against another person.
The phrase has been held from
earliest time to include every
fact which is material to be
proved to entitle the plaintiff
to succeed, and every fact which
the defendant would have a right
to traverse. Cause of action
has also been taken to mean that
particular act of the defendant
which gives the plaintiff his
cause of complaint, or subject
matter or grievance founding the
action, not merely the technical
cause of action.” (e.s)
See Halsbury’s Laws of
England (Fourth edition) Volume
37, paragraph 20 at page 27.
Cause of action estoppel
It has been submitted on behalf
of the plaintiffs that the
factual situation in existence
of which entitled the plaintiff
to institute the 1st
suit were different from that of
the 2nd suit. He
submitted that the 1st
suit was commenced because the
defendant refused to rectify the
anomalies between the passbooks
and the bank statements, whereas
the 2nd suit arose to
enforce the sum of GH¢49,249.01
with interest reached after the
reconciliation. The stand of
Counsel for the defendant was
simply that the appellants in
both suits wanted what they
thought was due and owing to the
deceased credited to her
accounts. Counsel for the
plaintiffs submitted further
that nothing was directly
decided in the 1st
case as the defendant failed to
file a defence so no issues were
raised to be determined directly
by the court and there could be
no issues to be identical with
the issues that arose in the 2nd
suit.
The submissions on behalf of the
plaintiffs seem quite attractive
and convincing. But with respect
to learned counsel, we think
they are misplaced. These are
our reasons. In determining
whether the cause of action or
whether the issues the subject
matter of the two suits are the
same the court is permitted to
scrutinise the pleadings, the
proceedings and the judgment in
the previous proceedings. After
this scrutiny as shown by the
facts set out by us previously,
we have no difficulty in coming
to the conclusion that the cause
of action or subject matter
which gave the plaintiff his
cause of complaint was the same
in both suits.
We do not see the justification
for this complaint on the part
of the appellant as the learned
trial judge in her judgment
similarly had no difficulty in
coming to the conclusion that
the cause of action was the same
in the 2 suits. She said:
“The parties are the same and
the subject matter of the
contention remains the accounts
of Comfort Mensah. In BFS/3/06,
there had been no reconciliation
done on the accounts of Comfort
Mensah by the defendants. This
reconciliation had been done by
the plaintiff acting alone and
having been unable to convince
the defendant to pay to them
what they identified as missing
from the bank statement, they
came to court for the purpose of
seeking an order compelling the
defendant to also reconcile the
records on the accounts to
reflect the true state of the
amounts payable and add interest
to that amount. To the extent of
ordering the reconciliation and
the crediting of outstanding
balances to the accounts of
Comfort Mensah based on the
reconciliation the matter was
settled between the parties by
the litigation and judgment in
BFS/3/06.”
Issue estoppel
We turn more specifically to the
question whether issue estoppel
availed the defendant. Though
the learned trial judge held
that the cause of action was the
same in the 2 suits she was
however of the view that the 2nd
suit raised a fresh issue which
is fundamentally different from
the issue determined in the
first action. She said:
“In the original statement of
claim in this action without
informing this court about the
earlier case and the court’s
orders and the report produced
by defendant pursuant to the
court’s orders, the plaintiff
simply prayed this court to
compel the defendant to pay GH¢49,249.15.
The plaintiffs’ counsel, in
strangely reticent pleadings
totally unsuited to a profession
in advocacy, failed to mention
the judicial antecedents of the
present action and how the
judgment in the previous action
formed the basis of the claims
in this action. These facts were
brought to my notice in
defendant’s defence as the basis
for its defence of estoppel…..On
9th February (the
plaintiffs) applied to this
court to amend their case. In
that amendment the plaintiff
expanded the facts in paragraphs
11 and 12 of its original
statement of case to cover all
the steps that had been taken as
a result of the court’s default
judgment in BFS/3/06, challenged
the conclusions and opinions in
the reconciliation report and
sought a declaration that the
conclusions of the report were
inconsistent with its findings
and as such defendant ought to
be compelled to pay the sums
found to be outstanding in the
report.”
According to the learned trial
judge:
“Following this amendment, a
fundamental issue for
determination was added to the
issues in this suit which put
this action in a realm totally
different to the issues in
BFS/3/06.The claim for
determination before the court
in BFS/3/06 was to compel the
defendant to reconcile the
records on the account of
Comfort Mensah and credit the
account with due sums. The issue
for determination before me is
whether or not the conclusion of
the reconciliation report is
incorrect, unethical and
inconsistent with the findings
of the report and if so, whether
the defendant should be
compelled to pay the plaintiffs
the sums identified as
outstanding in the findings of
the report. …. The propriety or
otherwise of the report, once
the defendant had obeyed the
court order to prepare it, gave
rise to a new cause of action.”
We have deliberately quoted
extensively from the judgment of
the trial court in order to
bring out the flaws therein
having regard to the facts and
the rule of issue estoppel. The
trial judge earlier in her
judgment had adequately set out
the conditions for estoppel to
apply; by stating that: “for
estoppel to apply the issues
raised in a new action should
have been dealt with by a court
of competent jurisdiction
between the same parties and
persons deriving rights from
them.” She correctly held that
the 1st suit has
settled the issue of
reconciliation between the
parties. She however failed to
appreciate the law that upon
making such a finding the same
parties were estopped from
reopening the matter of the
propriety or otherwise of the
reconciliation done by the bank
by a fresh action either before
the same court or a court of
co-ordinate jurisdiction.
It is trite law that where a
decision is final it cannot be
varied or re-opened by the same
court or a court of co-ordinate
jurisdiction. That final
judgment is only subject to
appeal. A decision is final if
it is:
“ one that cannot be varied,
re-opened or set aside by the
court that delivered it or
another court of co-ordinate
jurisdiction although it may be
subject to appeal to a court of
higher jurisdiction.” per Lord
Diplock in D.S.V. Silo-und
Verwaltungsgessellschaft mbh v.
Sennar (Owners), The Sennar (No.
2) [1985] 1 WLR 490.
The default judgment given in
suit No. BFS/3/06 was
interlocutory, but it became a
final judgment when the
defendant lodged Exhibit M in
the Court Registry. So as the
trial judge held the issue as to
the reconciliation of the
accounts was concluded. Had the
plaintiffs been satisfied with
the report, there is no doubt
that they would have entered
judgment and gone into execution
based on the balance stipulated
therein. As it turned out the
plaintiffs were dissatisfied
with Exhibit M as it gave the
total credit in the two
passbooks as GH¢239.89
as against the sum of GH¢49,249.01
that they were expecting. Their
remedy was to lodge an appeal
and not to institute a fresh
suit.
We therefore concur with the
opinion of the Court of Appeal
that the learned trial judge
erred in holding that the
plaintiffs had a fresh cause of
action to challenge the
propriety of Exhibit M. The
Court of Appeal held per
Gbadegbe J.A. ( as he then was)
that:
“The settled practice of our
courts is that whenever an order
made in an action has not been
properly carried out the remedy
of a party who claims to be
aggrieved thereby is to apply by
motion in the cause in which the
order was made to the court
seised with jurisdiction over
the subject matter for the act
which has been wrongly done to
be set aside and for the proper
thing to be done. Where however
the wrong has been perfected
into an order of the court by
its adoption then any party
claiming to be aggrieved may
appeal against it.”
He concluded that:
“If indeed the learned trial
judge had directed her mind
firstly to the remedies
available to a party when an
order of the court that is made
in an action is carried out in
an unauthorised manner and
therefore wrongful; I think that
in all probability she would
have decided the issue of
estoppel by judgment
differently.”
We entirely agree with the
appellate court. Once the
appellants were dissatisfied
with Exhibit M, it did not give
rise to a new cause of action.
They rather had a right of
appeal for effective remedy.
It is necessary to point out
that an appeal is said to be by
way of rehearing. And as
explained by Osei-Hwere J as he
then was in Nkrumah v. Ataa
[1972] 2 GLR 13 at 18:
“Whenever an appeal is said to
be "by way of re-hearing" it
means no more than that the
appellate court is in the same
position as if the re-hearing
were the original hearing, and
hence may receive evidence in
addition to that before the
court below, and it may review
the whole case and not merely
the points as to which the
appeal is brought…”
Had the appellants taken the
right step in pursuing an appeal
they could have convinced the
Court of Appeal to review the
whole issue of reconciliation of
the accounts by filing the
appropriate grounds of appeal.
Counsel rather took the risk of
mounting a fresh action and was
appropriately matched with the
plea of estoppel.
Conclusion
It is the opinion of this Court
that so long as the judgment in
Suit No. BFS/3/06 stands the
issue as to what are the actual
balances in the two Savings
Passbooks was determined and
that issue was concluded between
the parties. Accordingly the
cause of action on which this
suit was mounted to claim the
sum of GH¢49,249.01,
was caught by the plea of
estoppel by judgment.
The appeal therefore fails on
these grounds. We think the
resolution of this issue of res
judicata has disposed of the
appeal. The appeal is dismissed.
We will therefore affirm the
decision of the Court of Appeal
and dismiss the plaintiffs
claim.
S.O.A. ADINYIRA (MRS)
JUSTICE OF THE SUPREME COURT
I agree: DR. DATE-BAH,
J.S.C.
DR. S. K. DATE-BAH
JUSTICE OF THE SUPREME COURT
I also agree: ANSAH, J.S.C.
J. ANSAH
JUSTICE OF THE SUPREME COURT
I also agree: OWUSU, J.S.C.
R. C. OWUSU (MS)
JUSTICE OF THE SUPREME COURT
I also agree: BAFFOE-BONNIE,
J.S.C.
P. BAFFOE-BONNIE
JUSTICE OF THE SUPREME COURT
COUNSEL:
VICTOR AZAMETI LED BY DR. L. K.
AGBOSU FOR THE
PLAINTIFFS/RESPONDENTS/APPELLANTS.
LITHUR BREW & COMPANY FOR THE
DEFENDANT/APPELLANT/RESPONDENT. |
