JUDGMENT
1. By writ issued on 5th
November 2008, the Plaintiff
claims from the 1st
Defendant as follows:
“(a). Refund by the
Defendant of the sum of
U$82,266.00 being the sum it
guaranteed to pay the Plaintiff
under the Performance Bond in
the event of Merricom failing to
supply the airconditioners as
contracted.
(b). Interest at the
prevailing bank rate on the said
sum from 31st July
2007 until the date of final
payment.
(c). Costs”.
2. By order of court
dated 6th February
2009, the 2nd, 3rd
and 4th Defendants
herein were made third parties
to the suit subsequent to which
third party directions were
issued.
3. It is significant to
note from the onset that though
notice of legal representation
was filed on behalf of Justice
Amoah Nyarko 4th
Defendant herein, neither the 4th
Defendant nor his lawyers
participated in the trial
inspite of several notices
served on the said 4th
Defendant’s lawyers of the
commencement of the trial.
4. When the suit was
assigned to this court for
trial, I observed that the
defence set up by the 1st
Defendant, substantially
contains allegations of fraud
and in view also of the nature
of defence filed by the 2nd
and 3rd Defendants, I
set aside the third party orders
earlier made by this court, and
directed the proposed third
parties to file pleadings to
contest the action as
Defendants. My reason for
setting aside the third party
notice was essentially because
the 1st Defendant on
record had by its pleadings
substantially denied the
Plaintiff’s allegations and had
proceeded to set up a
counterclaim. It was my
considered view that the nature
of the 1st
Defendant’s pleadings is not
consistent with third party
proceedings as there was no plea
of indemnity by the 1st
Defendant against the 3rd
parties whether partially or
wholly with respect to the
Plaintiff’s claim. Consequently,
the third parties became
Defendants to the action in
their own right.
5. PLAINTIFF’S
CASE
The Plaintiff’s case arising
from the facts set out in the
pleadings is that, it is a free
zone company duly registered
under the laws of Ghana.
Plaintiff alleges that it
contracted the 2nd
Defendant to supply to it
airconditioners and other
merchandise at a contract sum of
U$411,300.00, U$82,266.00 of
which was to be paid by the
Plaintiff as down payment. As
security for the down payment,
the 2nd Defendant was
required by the Plaintiff to
furnish a performance bond in
favour of the Plaintiff to be
valid until 30/4/2008. The 2nd
Defendant procured from the 1st
a performance bond and presented
to Plaintiff on the strength of
which Plaintiff parted with the
sum of U$82,266 in favour of the
2nd Defendant. As it
turned out, the 1st
Defendant whose Chief Executive
Officer is the 3rd
Defendant allegedly failed to
perform on its obligations
whereupon the Plaintiff called
upon the 1st
Defendant to redeem the bond.
The 1st Defendant has
failed to pay Plaintiff on the
bond hence the instant action by
the Plaintiff.
6. 1ST
DEFENDANT’S CASE
As per its Amended Statement of
Defence filed pursuant to the
leave of court, the 1st
Defendant has denied liability
as alleged by the Plaintiff. The
1st Defendant in its
defence has substantially
pleaded fraud between the 2nd
and 3rd Defendants on
the one hand and its former
employee Justice Amoah Nyarko 4th
Defendant herein. The
particulars of fraud have set
out events of alleged collusion
between the 2nd and 3rd
Defendants and the 4th
Defendant but no allegations
have been made against the
Plaintiff except for the general
traverse contained in paragraph
15 of the 1st
Defendants pleadings as follows:
“(15). The
Defendant says the Plaintiff is
not entitled to the reliefs
sought or at all”.
Save this general traverse
therefore, no issues were joined
on the pleadings as between the
Plaintiff on the one hand and
the 1st Defendant on
the other.
7. The 1st
Defendant has set up a
counterclaim, against the
Plaintiff’s claim and
counterclaims as follows:
“By way of counterclaim, the
Defendant repeats paragraphs 3 –
10, 14 an 15 of its Statement of
Defence and claims against the
Plaintiff a declaration that the
alleged performance bond is
invalid on the grounds that it
was fraudulently obtained, no
consideration passed from
Merricom Solutions (Ghana) Ltd.
to the Defendant (1st
Defendant herein) in respect
therefore and it was not under
seal though it was required to
be under seal”.
8. It is against the
background of this rather
inelegant formulation of relief
per counterclaim by the 1st
Defendant that I set aside the
third party directions earlier
ordered by the pretrial judge
since as it would appear from
the pleadings the 1st
Defendant is not admitting any
liability at all in order to
properly seek indemnity from the
original third parties. I
therefore directed all the
parties to prosecute their
claims, and to set up their
defence and their counterclaims
as may be appropriate.
9. THE CASE OF 2ND
& 3RD DEFENDANTS
The 2nd and 3rd
Defendants as per their
pleadings admitted paragraphs 1,
2, 3, 4, 5 and 6 of the
Statement of Claim but denied
breaking the contract between
them and the Plaintiff to
warrant the exercise of rights
accruing to the Plaintiff under
the bond. At paragraphs 7, 9 and
10 of the Amended Statement of
Defence, the 2nd and
3rd Defendants
averred as follows:
“(7). At the request of the
2nd Defendant and
upon the payment and fulfilment
of all conditions precedent to
the issuance, a performance bond
was duly issued (with a bond) by
the 1st Defendant
which was submitted to the
Plaintiff which in turn released
an amount of U$82,266.00 as
deposit to 2nd
Defendant for the supply of
window unit airconditioners”.
(9). In further answer to
paragraph 9 2nd
Defendant avers that the
purchase order No. GH – 03 –
PO/4654 of 13th July
2007 did not state any specific
date for delivery of the
airconditioners.
(10). 2nd
Defendant avers that Plaintiff
unilaterally cancelled the
contract on 8th
February, 2008 by e – mail at a
time when due to delays
occasioned by Plaintiff; it had
extended the Bank Guarantee
provided to 2nd
Defendant to 31/8/08 to enable 2nd
Defendant supply the goods”.
10. A substantial part of
the Amended Statement of Defence
of the 2nd and 3rd
Defendants contain facts setting
out the efforts made by the 2nd
and 3rd Defendants
and the expenses it had incurred
while performing the contract in
the sum of U$30,000.00
representing air tickets, hotel
bills engagement of interpreter,
transport, food and other
miscellaneous expenses.
11. Further, the 2nd
Defendant alleged that as part
of its efforts to perform the
contract, it was compelled to
procure and obtain a loan of
U$292,319.00 by way of deferred
letters of credit by the
Amalgamated Bank Ltd. and had
incurred processing expenses of
U$5,846.38 representing 2% of
the loan.
12. The 2nd and
3rd Defendants’ case
is that the total result of its
efforts was the eventual
procurement of the
airconditioners they contracted
to supply to the Plaintiff only
for the Plaintiff to allegedly
cancel the contract unilaterally
thereby resulting into another
loss of U$3,445 to the 2nd
and 3rd Defendants.
13. The 2nd and
3rd Defendants allege
that at all times during the
course of performance of the
contract, it notified the
Plaintiff of every situation
concerning the movement of the
goods adding that Plaintiff is
not entitled to call on the bond
because the failure to supply
was due to the “unilateral and
unjustified cancellation of the
contract by the Plaintiff which
amounted to breach at a time
when the goods had been
delivered to shippers for onward
delivery to Ghana”.
14. The 2nd and
3rd Defendants have
set up a counterclaim and seek
against the Plaintiff.
“(a). A declaration that
Plaintiff’s cancellation of
contract of supply of
airconditioners on 8th
February 2008 amounted to
breach.
(b). Special Damages of
U$50,360.90 for breach of
contract.
(c).
General Damages for breach
of contract.
(d). Any other legal or
equitable relief that the court
will deem fit.
(e).
Legal and Solicitors fees”.
15. Significantly, the 2nd
and 3rd Defendant did
not in their pleadings deny the
allegation of fraud set out and
particularized by the 1st
Defendant against them and the 4th
Defendant. On the contrary, as I
have earlier reproduced they
have in paragraph 7 of their
pleadings described the bond
purported to have seen issued by
the 1st Defendant as
“duly issued upon payment and
fulfilment of all conditions
precedent”.
16. The 4th
Defendant as observed did not
take part in the proceedings
after having entered appearance
to the writ through his lawyers
on 3/3/2009 and they having been
served with notices of trial.
17. In its reply, the
Plaintiff reiterated that the
performance bond described by
the 1st Defendant as
fraudulently procured was
prepared in the 1st
Defendant’s office by the 1st
Defendant’s officer who
represented himself as having
authority to act and has infact
previously acted with such
authority. The Plaintiff denies
the allegation by the 1st
Defendant that the performance
bond in issue bears no seal of
the 1st Defendant and
says that it bore the stamp of a
duly authorised agent, the
Managing Director which stamp is
the property of the 1st
Defendant.
18. Before I examine the
issues set down for trial at the
close of pretrial conference, I
wish to place on record the fact
that the Plaintiff did not file
a reply to the amended statement
of defence of the 2nd
and 3rd Defendants
which was filed after I had set
aside the third party directions
and ordered the Defendants to
contest the Plaintiff’s claim as
Defendants in their own right.
In resolving the seeming
difficulty arising due to the
pleadings filed by the 2nd
and 3rd Defendants to
which no reply had been filed by
the Plaintiff I shall rely on
the position of the law posited
by Brobbey JSC in the case of
ADJETEY AGBOSU & ORS. VRS. KOTEY
& ORS. also known as IN RE –
ASHALLEY BOTWE LANDS [2003 –
2004] SCGLR 420 holding where he
held:
“The failure of a party to file
a formal reply to a Statement of
Defence did not necessarily
amount to an admission of the
facts pleaded in the Statement
of Defence and consequently it
was not fatal to a Plaintiff’s
case. A reply was not even
necessary if its sole aim was to
deny the facts alleged in the
defence, for in its absence
there is an implied joinder of
issues on the defence…………”.
“The established rule is that
where no reply is served within
seven days from the delivery of
the defence, all material
statements of fact in the
defence will be deemed to have
been denied. It is not the law
that failure to file a reply
amounts to admission of the
averments in the defence. The
principle enunciated in QUAGRINE
VRS. ADAMS [1981] GLR 599 cannot
properly be extended in its
application to failure to file a
reply.”
In the instant suit, it is
significant to state that the
counterclaim of the 2nd
and 3rd Defendants
contain a statement of reliefs
they seek arising from the
material contained in the
Amended Statement of Defence and
no new allegations of facts are
contained in the counterclaim
save the reliefs endorsed.
19. In the context of the
instant case, I hold that the
fact that the Plaintiff did not
file a reply to the 2nd
and 3rd Defendants’
Statement of Defence and the
counterclaim arising therefrom
cannot be construed to be an
admission of the facts contained
therein and of the counterclaim
set up. The onus of proof of
those allegations is on the 2nd
and 3rd Defendants if
they must constitute sufficient
grounds of defence and material
in proof of the counterclaim.
20. ISSUES FOR TRIAL
At the close of pretrial
conference several issues were
set down for trial. They are
substantially issues as between
the 1st Defendant on
the one hand and the 2nd
and 3rd Defendants
referred to in the settlement of
issues as 3rd
parties. The issues set down
between the Plaintiff and the 1st
Defendant are:
“(i). Whether or not
Plaintiff exercised due
diligence in relying on the
purported bond and
(ii). Whether the
Plaintiff is entitled to rely on
the performance bond issued by
the 1st Defendant on
behalf of the 1st and
2nd third parties
(Defendants) in favour of the
Plaintiff”.
As many as 14 issues were
however set down for trial as
between the Defendants excluding
the 4th Defendant who
did not take part in the
proceedings.
I shall determine the issues set
down most of which are
collateral and consequential to
key issues as between the
Defendants arising from their
final pleadings in order to
determine the dispute between
the parties.
21. DETERMINATION OF
ISSUES BY THE COURTS.
As I had stated earlier several
of the issues set down are
merely collateral or
consequential and will depend on
the determination of some key
issues in this suit to be
determined based on the facts
and evidence adduced at the
trial. The law is trite and same
supported by statute that for a
court to decide a case one way
or the other, each party to the
suit must adduce evidence on the
issues to be determined by the
court to the standard prescribed
by law. This position is
supported by various provisions
of the Evidence Act 1975 (NRCD
323) Section 14 of which
provides:
“(14). Except as
otherwise provided by law,
unless and until it is shifted a
party has the burden of
persuasion as to each fact the
existence or non existence of
which is essential to the claim
or defence he is asserting”.
22. In the instant suit,
the issues to be determined are
two fold. They are the issues
agreed between the parties as
set down at the close of the
pretrial as well as the issues
dictated by law in the
particular context of the facts
and evidence in this suit.
23. In order to succeed,
all parties carry the burden of
proof to the satisfaction of the
court in accordance with
prescribed statutory standards.
With respect to the Plaintiff,
and 2nd and 3rd
Defendants the standard of proof
required for the discharge of
its legal burden is proof on the
balance of the probabilities
while the 1st
Defendant carries a heavier
standard of proof of its
allegations of fraud in the
procurement of the performance
bond as well as the “particulars
of fraudulent collateral” set
out in paragraph 3(1) – (3) of
the amended statement of
defence. The 1st
Defendant will be required to
discharge a burden beyond
reasonable doubt since the
allegation of fraud is one of
criminal conduct.
24. Under sections 10(1)
and (2) of the Evidence Act it
is provided as follows:
“(10). The burden of persuasion
means the obligation of a party
to establish a requisite degree
of belief concerning a fact in
the mind of the tribunal of fact
or the court”.
“(2). The burden of
persuasion may require a party
to raise a reasonable doubt
concerning the existence or non
– existence of a fact by a
preponderance of the
probabilities or by proof beyond
a reasonable doubt” (applicable
in this suit to the 1st
Defendant’s allegation of
fraud)”.
25. For the parties to
succeed in establishing their
claims and counterclaims
therefore, the evidence adduced
by each party must in the
opinion of the court be more
cogent or convincing than that
adduced by his opponent. As a
general rule, in civil cases, it
is he who asserts, who must
prove except in special
circumstances where the burden
shifts by operation of law. It
follows that the party bearing
the legal burden also carries
the evidential burden on an
issue.
26. These general
principles have had judicial
support in two leading dicta.
First Kpegah J. A. (as he then
was) in the case of ZABRAMA VRS.
SEGBEDZI [1991] 2 GLR 221 at 224
where he stated that:
“a person who makes an averment
or assertion which is denied by
his opponent has a burden to
establish that his averment or
assertion is true. And he does
not discharge this burden,
unless he leads admissible and
credible evidence from which the
fact or facts he asserts can
properly and safely be inferred.
The nature of each averment or
assertion determines the degree
and nature of the burden”.
27. The same principle has
been emphasised in ABABIO VRS.
AKWASI III [1994 – 95] GBR Part
II at page 74 where the Supreme
Court restated the principle of
law cited above and the earlier
position in the earlier case of
BANK OF WEST AFRICA LTD. VRS.
ACKUN [1963] 1GLR 176 and said.
“a party whose pleadings raised
an issue essential to the
success of a case assumed the
burden of proving such issue.
The burden only shifted to the
Defendant when the Plaintiff has
adduced evidence to establish
the claims”.
The position of the law is not
in dispute that Plaintiff here
includes a Defendant
counterclaimant.
28. How did the Plaintiff
discharge its legal burden in
the context of the statutory
requirements and the judicial
principles set out by case law?
The Plaintiff’s evidence in this
suit is simple and straight
forward. In support of the
averments contained in the
Statement of Claim and its
reply, the Plaintiff’s witness
one Frank Inns testified that,
he is a procurement manager of
the Plaintiff company. That
sometime in July 2007, Plaintiff
placed a purchase order for some
airconditioners with the 2nd
and 3rd Defendants.
The said purchase order was
tendered in evidence as Exhibit
‘A’ and contains a delivery date
by 1st September
2007. As part of the Plaintiff’s
duty with respect to the order,
it paid the sum of U$82,266.00
to the 2nd and 3rd
Defendants representing 20% of
the total purchase price. As a
guarantee for performance by the
2nd and 3rd
Defendants, the Plaintiff
insisted on a performance bond
which was provided by the 2nd
and 3rd Defendants
from the 1st
Defendant company. The 2nd
and 3rd Defendants
according to Plaintiff’s witness
failed to supply the
airconditioners by the agreed
date on Exhibit ‘A’.
Subsequently 2nd and
3rd Defendants
undertook in writing to supply
the airconditioners by the 8th
day of February 2008 evidenced
by Exhibit ‘C’ dated 30th
January 2008. Upon failure to
deliver, Plaintiff cancelled the
order. Plaintiff’s witness
testified that on the 25th
February 2008 Plaintiff received
an e – mail from the 3rd
Defendant seeking audience from
Plaintiff’s witness on how to
refund the down payment of
U$82,266.00.
29. The 2nd and
3rd Defendants
failing to discharge on their
obligations therefore, the
Plaintiff had to call upon the 1st
Defendant to discharge its
obligation under Exhibit ‘B’ the
performance bond. The 1st
Defendant refused, having
discovered that the performance
bond purportedly issued from 1st
Defendant’s office by one of its
staff did not meet the
requirements for a performance
bond property issued by the 1st
Defendant and not having been
duly issued same was procured by
fraud.
30. Under cross
examination by 1st
Defendant’s counsel Plaintiff
stated that the performance bond
was facilitated by the
Plaintiff’s accounting
department and that while it
bore no date, its validity
period was dependent on the
discharge of the bond either
through delivery of the goods
for which it was procured or non
delivery.
31. Under further cross
examination by 1st
Defendant’s counsel Plaintiff’s
witness testified as follows:
“Q. Are you aware your
account manager one Dere Kumi
approached 1st
Defendant at his head office.
A. No My Lord, I was not
involved in that but I will say
100% correct that Dere Kumi was
the account manager at that
time.
Q. What I am saying is
that are you ware that he was at
the head office of the 1st
Defendant on the 12th
of March 2008?
A. No My Lord.
Q. So you will not be
aware of what transpired between
him and the Head Office?
A. No My Lord.
Q. I put it to you that
at that meeting he was told that
if the document came from Tema
he should go to the Tema office
are you aware of that?
A. No My Lord.
Q. And are you aware that
the next day the 13th
March 2008 he was at the Tema
office of the 1st
Defendant.
A. No My Lord.
Q. So you would not know
what transpired?
A. That is correct”.
32. The evidence
reproduced above is in substance
the line of cross examination
adopted by the 1st
Defendant’s counsel. In my view
it failed to contradict the
Plaintiff’s evidence as set out
in the Plaintiff’s pleading. The
reference dates contained in the
cross examination have no
relevance in 1st
Defendant’s attempt to impeach
Plaintiff’s evidence. The
evidence before the court is
that it was the 2nd
Defendant who procured Exhibit
‘B’ and presented same to the
Plaintiff as guarantee for funds
provided to the 2nd
and 3rd Defendants
for a consideration the 2nd
and 3rd Defendants
failed to discharge.
33. The Plaintiff in my
view lawfully called upon the 1st
Defendant to discharge its
obligations on the performance
bond Exhibit ‘B’. Any meetings
subsequent to the provision of
the performance bond are to my
mind of no relevance to the
facts in issue and the evidence
adduced by the Plaintiff. The
crucial issue however is a
determination whether as a
matter of law and public policy,
Plaintiff can found on a
document procured by fraud if
fraud is proven from the facts
and evidence.
34. In my view therefore,
at the close of the cross
examination by the 1st
Defendant’s counsel, Plaintiff’s
evidence stood unimpeached and
uncontradicted with respect to
the facts placed in its
pleadings. Having arrived at
this finding it is crucial to
determine whether or not even if
Plaintiff innocently relied upon
the performance bond Exhibit
‘B’, it will notwithstanding the
fact of same having been
procured by fraudulent means
give rise to liability for which
the 1st Defendant
could he held liable.
35. In its amended
Statement of Defence filed on
12/8/2009 the providers of
Exhibit ‘B’ to Plaintiff averred
in paragraph 7 as follows:
“7. At the request of the
2nd Defendant and
upon the payment and fulfilment
of all conditions precedent to
the issuance of a performance
bond was duly issued with a bond
by the 1st Defendant
which in turn released an amount
of U$82,266.00 as deposit to 2nd
Defendant for the supply of
window airconditioners”.
36. In my view therefore
the real issue in controversy
with respect to the validity
and/or authenticity of Exhibit
‘B’ the performance bond, is
between the 1st
Defendant on the one hand and
the 2nd and 3rd
Defendants. The undisputed facts
contained in paragraph 7 of the
2nd and 3rd
Defendant’s Statement of Defence
as far as the Plaintiff is
concerned is that, Exhibit ‘B’
was duly procured and that in
acting upon it, the Plaintiff
has suffered loss of U$82,266.00
without a fulfillment of the
bargain for which it was
provided hence Plaintiff’s
action.
37. While Plaintiff’s
witness under cross examination
by counsel for the 2nd
and 3rd Defendants
claims the authenticity of
Exhibit ‘B’ was not in issue,
what the 2nd and 3rd
Defendants sought to establish
during cross examination of
Plaintiff’s witness was that
Plaintiff prematurely cancelled
the contract of supply. As
between the Plaintiff and the 2nd
and 3rd Defendants
therefore Exhibit ‘B’ was not an
issue.
In the course of cross
examination of Plaintiff’s
witness by counsel for the 2nd
and 3rd Defendants,
the following evidence was
elicited.
“Q. I am putting it to you
that Red Sea were wrong in
abrogating the contract.
A. We were not wrong
anywhere and in no shape
whatsoever.
Q. I am putting it to you
that as a result of your
unilateral cancellation of such
contract Merricom incurred large
cost.
A. They may have. I donot
know. I donot work for Merricom.
I donot want to work for
Merricom but I do know for a
fact that Red Sea (Plaintiff)
incurred much more expense
because we had to go to a
different vendor to have him
ship faster. Its very very
expensive for Red Sea.
Q. I am putting it to you
that the airconditioners the
subject matter of this suit were
never delivered even after five
months of cancellation”.
38. Though the Plaintiff’s
witness provided an answer to
the above question I donot see
its relevance the delivery
referred to being the result of
an entirely different contract
the terms of which were not
placed before the court.
39. In further testimony
under cross examination however,
the Plaintiff’s witness denied
the expenses suggested to him to
have been incurred by the 2nd
and 3rd Defendants as
a direct result of efforts made
by the 2nd Defendant
to discharge its obligations
under the contract.
To a question.
“I am finally putting it to you
that the performance bond the
contract failed because you
cancelled the contract
unilaterally at the last stage
when the goods were in Nigeria
for due shipment to Ghana”
Plaintiff’s witness
answered
“That could be true but you have
to remember I heard this for 5
months. How was I going to hear
for another year another two
years you donot know. I was told
they were in Lagos. I was told
they would be on the water
within one day. I asked if he
would show me the shipping
documents, we will proceed. I
never received the shipping
documents because they were
never shipped.
40. From my evaluation of
the evidence of the Plaintiff in
examination in chief and during
cross examination and the
documentary evidence before me,
I think while the Plaintiff has
discharged its burden of proof
and the evidential burden in the
context of its claim against 2nd,
3rd and 4th
Defendants it failed to
discharge the burden of proving
that the performance bond it
accepted was duly and properly
issued by the 1st
Defendant. That is where
Plaintiff’s diligence in
accepting the performance bond
as in Exhibit ‘B’ without
reference to the 1st
Defendant before releasing its
funds to the 2nd
Defendants questions Plaintiff’s
conduct in the transaction.
41. Notwithstanding that,
in my opinion, the issue of the
authenticity of the bond and
whether or not it was procured
fraudulently is a matter to be
determined as between the 1st
Defendant and the other
Defendants. The principle of law
applicable in our jurisdiction
is that fraud vitiates
everything, though there are
exceptions the principle is
relevant in the context of this
particular situation. While
there is no evidence before me
that Plaintiff colluded with the
2nd to 4th
Defendants to procure Exhibit
‘B’ the irregularities said by
the 1st Defendant to
be apparent on Exhibit ‘B’ and
the fact that it was not duly
authorised and procured became
known to the 1st
Defendant only after the
Plaintiff had presented it for
the redemption of its loss.
In the particulars of fraudulent
collateral set out in paragraph
3(1) to (3) of the 1st
Defendant’s Amended Statement of
Defence and counterclaim
therefore, the 1st
Defendant alleged in sub
paragraph (3) as follows:
“(3). Merricom Solutions
(Gh.) Ltd. (2nd
Defendant herein) had colluded
with an employee of Apex
Valuation Surveying and Property
Consult La, Accra who wrote
forged valuation reports for it
on forged letter heads”.
This averment and evidence
adduced in support by the 1st
Defendant’s witness has not been
contradicted by the 2nd
and 3rd Defendant nor
did the 3rd Defendant
who testified for himself and
the 2nd Defendant
creditably discharge himself on
the issue in his testimony. The
principle of implied admission
for failure to cross examine the
1st Defendant’s
witness on the issue will apply
against the 2nd and 3rd
Defendants. See the case of
MANTEY VRS. BOTWE [1989 – 90]
GLR 179.
42. From the evidence
adduced by the 1st
Defendant through its witnesses,
that statement of fact was
substantiated and it remains
incontrovertible. That averment
having traversed paragraph 7 of
the 2nd and 3rd
Defendants’ Statement of Defence
and Counterclaim, the burden
shifted on the 2nd
and 3rd Defendants to
provide sufficient and credible
evidence that its averment that
Exhibit ‘B’ was in all
probability duly procured as
against the 1st
Defendant’s averment and
evidence that same was procured
fraudulently.
I find therefore that while 1st
Defendant had established that
Exhibit ‘B’ provided by the 2nd
and 3rd Defendants
was procured by fraud
perpetuated by the 2nd
and 3rd Defendants in
collusion with the 4th
Defendant an employee of the 1st
Defendant at the time. The fraud
element which has not been
sufficiently contradicted
vitiates any claim the Plaintiff
can pursue thereon against the 1st
Defendant. From the evidence,
however the Plaintiff has
clearly established a case for
recovery of any loss suffered
from the 2nd, 3rd
and 4th Defendants
jointly and severally.
43. In the case of Re
Krams (Deceased) YANKYERAH VRS.
OSEITUTU [1989 – 90] 1GLR 638 it
was held that:
“In civil trials although the
burden of proof lay on the one
who must succeed in the action,
it shifted in the course of the
trial”. See also Wood JSC (as
she then was) in the case of
ADJETEY VRS. AGBOSU & ORS. VRS.
KOTEY & ORS. also known as Re -
Ashalley Botwe Lands [2003 –
2004] SCGLR 420.
44. I hold therefore that
having supported its allegation
with cogent evidence, and same
not having been discredited
through cross examination, the 1st
Defendant has beyond all
reasonable doubt sufficiently
established the allegation of
fraud perpetuated by the 2nd
and 3rd Defendants in
collusion with the 4th
Defendant and is therefore
entitled to the declaration
sought as set out in its
counterclaim.
45. In arriving at this
conclusion, I have adverted my
mind to the provisions of
Section 139 to 143 of the
Companies Act 1963 (Act 179)
because from the pleadings of
the Plaintiff, 1st
Defendant, and the 2nd
and 3rd Defendants,
it is not in dispute that the 4th
Defendant was at all material
times an employee of the 1st
Defendant company and may be
presumed to have facilitated
Exhibit ‘B’ in his capacity as
an officer or agent of the
company and/or acting for and on
behalf of 1st
Defendant’s Managing Director.
46. Section 139 provides:
“Any act of the members in
general meeting, the board of
directors, or a managing
director while carrying on in
the usual way the business of
the Company shall be treated as
the act of the company itself
and the company shall be
criminally and civilly liable
therefor to the same extent as
if it were a natural person”.
Provided that:
“(a). The company shall not
incur civil liability to any
person if that person had actual
knowledge at the time of the
transaction in question that,
the general meeting, board of
directors, or managing director,
as the case may be, had no power
to act in the matter or had
acted in an irregular manner or
if, having regard to his
position with or relationship to
the company, he ought to have
known of the absence of power or
of such irregularity.
(b).
……………………….”
47. Section 140 provides:
“(1). Except as provided in
section 139 of this code, the
acts of any officer or agent of
a company shall not be deemed to
be the acts of the company
unless:-
(a). The company, acting
through its members in general
meeting, board of directors, or
managing director, shall have
expressly or impliedly
authorised such officer or agent
to act in the matter, or
(b). The company, acting as
aforesaid, shall have
represented the officer or agent
as having its authority to act
in the matter, in which event
the company shall be civilly
liable to any person who has
entered into the transaction in
reliance of such representation
unless such person had actual
knowledge that the officer or
agent had no authority or
unless, having regard to his
position with or relationship to
the company, he ought to have
known of such absence of
authority”.
48. Section 142 of the
code deals with presumptions but
subsection (a) of the section
provides that:
“(a). a person shall not be
entitled to make such assumption
aforesaid if he had actual
knowledge of the contrary or if,
having regard to his position
with or relationship to the
company he ought to have known
to the contrary”
49. That to my mind is the
catch. From the overwhelming
evidence adduced in this suit it
is not in dispute that the 2nd
Defendant made two attempts at
providing collateral security
for the issuance of a
performance bond by the 1st
Defendant. Both properties as
pleaded in the 1st
Defendant’s amended statement of
defence which has not been
denied turned out to have been
falsely misrepresented intended
to deceive the 1st
Defendant into providing a
performance bond. The 1st
Defendant declined and provided
evidence per Exhibits 21, 23 and
24 of the 2nd
Defendant’s fraudulent
misrepresentation all of which
have not been denied by the 2nd
and 3rd Defendants.
When eventually the 2nd
Defendant procured Exhibit ‘B’
from the 4th
Defendant who from the evidence
had no express or implied
authority to issue same, the 2nd
Defendant’s officers know it had
not satisfied the conditions
under which Exhibit ‘B’ could
have been duly issued by the 1st
Defendant and therefore by
passed 1st
Defendant’s official channels.
In my view, Exhibit ‘B’ was
fraudulently procured and
therefore no liability can be
founded thereon, not even by an
innocent third party such as the
Plaintiff.
50. It is for the above
reasons that I donot find the 1st
Defendant civilly liable for the
fraudulent acts of the 4th
Defendant notwithstanding the
provision of section 143 of Act
179 because in my view section
143 is qualified by the
provisions of section 139 to 142
and deals with situations where
a company would have been
ordinarily liable
notwithstanding that its officer
“acted fraudulently or that a
document had been forged
purporting to be sealed by or
signed on behalf of the
company”.
51. The distinguishing
situation in the instant suit is
that, the 2nd
Defendant from the evidence
adduced, acted in collusion with
the 4th Defendant and
procured Exhibit ‘B’ knowing
fully well that it was not duly
authorised and therefore was
procured by fraud. It will be
preposterous to hold that any
benefit should enure to the 2nd
and 3rd Defendants
and by necessary implication to
the Plaintiff by reason of an
obligation created by fraud.
52. Having arrived at this
conclusion what remains is the
nature of the burden on the 1st
to 4th Defendants in
relation to Plaintiff’s claim.
Their position has been more
appropriately stated by Brobbey
JSC in the In Re – Ashalley
Botwe Lands case where he said.
“The effect of sections 11(1)
and 14 and similar sections in
the Evidence Decree 1975 may be
described as follows: A litigant
who is a defendant in a civil
case does not need to prove
anything: the Plaintiff who took
the Defendant to court has to
prove what he claims he is
entitled to from the Defendant.
At the same time if the court
has to make a determination of a
fact or of an issue, and that
determination depends on
evaluation of facts and
evidence, the Defendant must
realise that the determination
cannot be made on nothing. If
the Defendant desires the
determination to be made in his
favour then he has a duty to
help his own cause or case by
adducing before the court such
facts or evidence that will
induce the determination to be
made in his favour………………”
53. Let me however first
deal with the 4th
Defendant’s position since he
failed to file pleadings after
having entered appearance
through his lawyers. The 4th
Defendant having refused to
participate in the proceedings
declined to avail himself the
opportunity to present his side
of the case particularly when
allegations of fraud had been
levelled against him by the 1st
Defendant. Since the 1st
Defendant led evidence in
support of the allegations, I
think the 1st
Defendant clearly established a
case of fraudulent breach of
duty against the 4th
Defendant which has had the
effect of completely impeaching
the credibility of Exhibit ‘B’.
The absence of the 4th
Defendant placed the 2nd
and 3rd Defendants in
a more precarious situation as
they failed to adduce evidence
to prove that Exhibit ‘B’ was
duly procured hence my earlier
finding and grant of the relief
of declaration sought by the 1st
Defendant.
54. In my view, the
evidence that the respective
collaterals attempted to be used
by the 2nd and 3rd
Defendants having been found to
be non existent was
unassailable. From the evidence
adduced through 1st
Defendant’s witnesses and the
exhibits tendered, I have no
doubt that fraud was perpetuated
against the 1st
Defendant by the 4th
Defendant in collusion with the
2nd and 3rd
Defendants who benefited
therefrom and had used same to
procure a contract from the
Plaintiff.
55. Having concluded that
Exhibit ‘B’ was fraudulently
procured by the 2nd
and 3rd Defendants in
collusion with the 4th
Defendant an employee of the 1st
Defendant at all material times,
I shall limit my evaluation of
the evidence of the 2nd
and 3rd Defendants
relative only to the effect of
such evidence in proof of their
counterclaim against the
Plaintiff.
56. In his testimony, the
3rd Defendant Enoch
Cobbina claimed he is the Chief
Executive Officer of the 2nd
Defendant company. He admitted
receiving the sum of U$82,266.00
on the strength of the
performance bond which he
confirmed to be the same
document as in Exhibit 15
earlier in this proceedings
marked Exhibit ‘B’ adjudged to
have been procured by fraud.
57. On the relevant issue
as to what the 3rd
Defendant did after the letters
of credit were established in
furtherance of the performance
of the contract the 3rd
Defendant testified as follows:
Answer. “When the LC was
established we were asked again
from Amalbank to meet the LC
conditions to provide. You know
by the time the LC was in place
the contract expired by 31st
March 2008. For that matter
Amalbank requested that we
should extend the contract which
I sent a letter to Red Sea and
then the contract was extended.
Witness then tendered Exhibits
‘4D’, ‘4D1’ and ‘4D2’ comprising
e – mail correspondence from 3rd
Defendant to an officer of the
Plaintiff with respect to a
request on HSBC to extend the
expiry date of a bank guarantee
they had provided in favour of
the Plaintiff.
58. In Exhibits ‘7G’ and
‘7G1’ the 2nd and 3rd
Defendants tendered documents,
being letters from the Plaintiff
irrevocably undertaking the
payment in the joint names of
Amalbank and the 2nd
Defendant of payments due from
the Plaintiff with respect to
the contract. In Exhibit ‘9J’
the 2nd and 3rd
Defendants tendered a tripartite
agreement between Amalgamated
Bank Ltd. SDV Ghana Ltd. and the
2nd Defendant
relative to the transportation
of airconditioners for Apapa
Port in Nigeria to the Port of
Tema in Ghana.
Exhibit ‘9J’ was dated 30th
January 2008 coincidentally the
same date Exhibit ‘C’ was made
in which 2nd and 3rd
Defendants had undertaken to
ensure that all airconditioners
will be at Tema port and that if
by 7:00am of 8th
February 2008 delivery was not
made to the Plaintiff, Plaintiff
could cancel the contract and
recover from the bond.
59. A casual reference to
the operative words in Exhibit
‘9J’ tendered by the 2nd
and 3rd Defendants in
evidence reads.
“Whereas
1. The customer has
agreed to purchase 9,000 BTU
Samsung Window Airconditioners
from Kumati Ventures of United
Arab Emirates through its
subsidiary Far East Mercantile
Ltd. of Plot 721, Adetokumbo
Ademola Street P. O. Box 73723
Victoria Island Lagos
(hereinafter called “the
supplier”).
60. What the above
reproduced recital means is that
while on the 30th
January 2008 the 2nd
and 3rd Defendants
had not even purchased the
airconditioners let alone
forward same for shipment to the
Plaintiff, it was undertaking on
the same day to supply within
one week of the said date on the
blind side of the Plaintiff.
Indeed clause 6.0 Exhibit ‘9J’
on duration states.
“1. This agreement shall
subsist from the date of
execution up to the date of
delivery of the airconditioners
at the port of Tema and payment
for the freight and handling
charges by the Bank to the
supplier and Transporter which
date shall not extend beyond 29th
February 2008”.
In my view, whichever was signed
earlier in time between Exhibits
‘9J’ and Exhibit ‘C’ the 3rd
Defendant acting for the 2nd
Defendant knew that the dates
contained in the two documents
would not make one of the two
documents reasonably effective.
It is safe to infer that the 3rd
Defendant committed himself and
the 2nd Defendant to
the undertaking in Exhibit ‘C’
without any regard to the
Plaintiff’s interest.
61. In further testimony 3rd
Defendant tendered airline
tickets to substantiate the
allegation of travelling
expenses said to have been
incurred in the pursuance of the
contract between Plaintiff and
the 2nd and 3rd
Defendants. The evidence that
the 2nd and 3rd
Defendants suffered a loss of
U$34,000.00 from charges by
Amalbank was however not
supported by the pleadings nor
was there any documentary
evidence in support thereof even
if it were to be supported by
the head of claim under special
damages which was not
particularised nor can same be
awarded even if proved under the
head of claim for general
damages. See Twum JSC in DELMAS
AGENCY GHANA LTD. VRS. FOOD
DISTRIBUTORS INT. LTD. [2007 –
2008] SCGLR 748 Holding (3) on
general damages.
62. Under cross
examination by Plaintiff’s
counsel the 3rd
Defendant was asked:
“Q. Did you tell them that
the goods were on the high seas
and they are coming?
A. No My Lord. What I
remembered telling Red Sea is
that we have completed payment
and as such we entered agreement
with SDV, Amalbank and Merricom
Solution to lift the goods from
Nigeria to Ghana which I gave
them the agreement we had to Red
Sea Housing. (That agreement
referred to is Exhibit ‘9J’).
Q. You gave who the
agreement?
A. The agreement we
entered that is the SDV Merricom
Solution and Amalbank, I handed
over a copy of the agreement to
Frank Inns (Plaintiff’s officer)
that is the representative of
Red Sea.
Q. And when was that?
A. That was after 14th
January 2008”.
63. As I have earlier
observed Exhibit ‘9J’ is the
agreement referred to and a
recital in the agreement
suggests that the supplier 2nd
Defendant herein has agreed to
purchase 9,000 BTU Samsung
Window Air Conditioners” That
agreement was dated 30th
January 2008 by which date any
undertaking as in Exhibit ‘C’
countersigned by the 3rd
Defendant for the 2nd
Defendant could not have been
honestly made as no
airconditioners had been
purchased at the time for supply
to the Plaintiff.
64. It is no wonder
therefore when under further
cross examination by Plaintiff’s
counsel the 3rd
Defendant answered as follows:
“Q. Now the document
(Exhibit ‘C’) also says that if
all airconditioners were not
delivered by the 7th
February 2008 the contract will
be cancelled Did it say so?
A. My Lord if 9,000 BTU
are not delivered at Tema port
by 7:00am Rea Sea Housing and
Merricom both agreed to cancel
the parties order.
“Q. It also says that
after cancellation the
U$82,266.00 advance payment will
be refunded to Red Sea, it also
says so Not so?
A. That is what he put
down.
Q. That is what you
signed.
A. Yes I signed. I signed
this document because it has no
meaning to me………………..”
Q. Now this document that
you signed said 9:00
airconditioners should be at the
Tema Port by 7th Mr.
Cobbina, after this you wrote a
very apologetic letter to Red
Sea.
A. Yes…………………
Q. Mr. Cobbina you wrote
on the 21st of April
2008 offering to pay back.
A. Yes I think so.
Q. In that letter you
offered to pay back the rate of
U$15,000.00. Do you recollect
that?
A. I recollect that.
Q. And you recollect
offering to pay U$15,000.00 in 6
installments.
A. Yes I did.
Q. And the 7th
payment will be U$7,266 not so?
A. Yes I do.
Q. The total of this is
U$82,266.00 not so?
A. It is.
Q. There is no reference
to any expenses in this
calculation of U$82,266 is it
not right?
A. Yes it is.
Q. So where is the
expenses deduction from this
money that you offered to pay
back?
A. None My Lord”.
65. At this stage during
cross examination, three
situations were apparent.
(1). First, Plaintiff on
the strength of evidence adduced
through cross examination
established on the balance of
all the probabilities a case for
recovery of the sum of
U$82,266.00 from the 2nd
and 3rd Defendants
and other consequential reliefs
jointly with the 4th
Defendant the absentee Defendant
who procured the fraudulent
performance bond Exhibit ‘B’.
(2). Second, The 2nd
and 3rd Defendants
failed on the evidence to
substantiate their counterclaim
against the Plaintiff and on the
facts and evidence will not be
entitled to any of the reliefs
endorsed thereon.
(3). Third, by his answers
in cross examination with
respect to why 3rd
Defendant signed Exhibit ‘C’,
the 3rd Defendant
damaged his own credibility and
rendered himself a dishonest
contracting party of the
Plaintiff and an untruthful
witness.
66. It was Ollenu J. A.
(as he then was) who held in the
case of KYIAFI VRS. WONO [1967]
GLR 463 on the credibility of
witnesses that
“The question of impressiveness
or convincingness are products
of credibility and veracity. A
court becomes convinced;
impressed or unimpressed with
oral evidence according to the
opinion it forms of the veracity
of witnesses”.
67. While the 3rd
Defendant gave inconsistent
testimonies with respect to his
counterclaim against the
Plaintiff, he did not impress me
as a truthful witness who only
had to cave in due to the
vigorous cross examination
conducted by the Plaintiff’s
counsel on the admission to
refund the deposit of
U$82,266.00 which the 2nd
and 3rd Defendants
had accepted to pay even before
this action was commenced.
68. On the pleaded facts,
2nd and 3rd
Defendants had the particular
burden of producing evidence to
substantiate their counterclaim
against the Plaintiff. They
failed.
69. Having granted 1st
Defendant’s counterclaim to the
effect that Exhibit ‘B’ the
performance bond was invalid as
it was procured by fraud, I
hereby dismiss Plaintiff’s claim
against the 1st
Defendant.
70. I however hold that 2nd
and 3rd Defendant
together with the 4th
Defendant who failed to
participate in the trial are
jointly and severally liable to
the payment of the sum of
U$82,266.00 to the Plaintiff
together with interest at the
prevailing bank interest rate
from 31st July 2007
until the date of final payment.
70. I award costs in
favour of the 1st
Defendant against the 2nd,
3rd and 4th
Defendants in the sum of
¢2,500.00 to be paid jointly and
severally and to the Plaintiff
and the sum of ¢2,500.00 against
the 2nd, 3rd
and 4th Defendants to
be paid jointly and severally.
71. For the avoidance of
doubt, all the reliefs endorsed
in paragraph 30(a) to (e) of the
2nd and 3rd
Defendants counterclaim are
hereby dismissed.
(SGD).
JUSTICE I. O. TANKO AMADU
JUSTICE OF THE HIGH COURT
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