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JUDGMENT
1. Plaintiff claims from
the Defendants jointly and
severally the following:
“(a). Recovery of the sum of
$150,000 being Defendants
indebtedness to Plaintiff.
(b). Interest on the said
$150,000.00 at the prevailing
bank rate from 11 – 11 – 2009
till date of final payment.
(c). An order for judicial
sale of 2nd
Defendant’s property known as
Plot No. XI or (XII)
Abrepo/Bohyen, in the Ridge
Residential Area Layout,
Kumasi”.
2. The Plaintiff’s case
is that it is a registered
company engaged in the business
of insurance. It asserts that at
the 1st Defendant’s
request it issued to the
International Air Transport
Association referred to in this
judgment as (IATA) guarantee
bond in the sum of $150,000 to
cover default arising from
tickets supplied to the 1st
Defendant by IATA.
3. Plaintiff avers that
by an agreement executed by the
parties on or about 11 – 11 –
2009, the 1st
Defendant agreed to pay the said
sum claimed in five instalments
set out in Plaintiff’s pleadings
in pursuance of which, 1st
Defendant issued post dated
cheques in favour of the
Plaintiff. The 2nd
Defendant had undertaken to be
personally liable in the event
of 1st Defendant’s
default on its obligations
thereof and as security, 2nd
Defendant mortgaged his property
described in the writ. The 1st
Defendant’s cheques for the
months of December 2009 and
January 2010 were dishonoured
upon presentation, while the
remaining cheques were
countermanded by the 1st
Defendant.
4. The Plaintiff has
commenced this action for
recovery of the said sum of
$150,000.00 with interest
thereon and an order for
judicial sale which in my view
is an alternative relief sought
though not so expressly
endorsed.
5. The Defendants deny
liability. They have per their
pleadings not denied the
Plaintiff’s claim of having
issued a guarantee bond in
favour of the 1st
Defendant but assert that as an
insurance company, Plaintiff
herein had demanded and obtained
full payment of policy premium.
Therefore, according to
Defendants, Plaintiff only
discharged its legal obligation
under the guarantee bond for
which premium Defendants had
already paid. The Defendants
have denied the Plaintiff’s
allegation that post dated
cheques were paid by the 1st
Defendant in favour of Plaintiff
but in what appears to be a
contradiction of 1st
Defendant’s denial, Defendants
plead pressure from the
Plaintiff on them to issue the
cheques as condition for renewal
of the bond.
6. Defendants assert
that after receiving the cheques
Plaintiff refused to renew the
bond which resulted in the
Defendants business going under.
Defendants deny providing any
collateral and contend that the
issuance of the bond never
required a collateral nor was a
mortgage as claimed by the
Plaintiff required by the bond.
7. The Defendants assert
that Plaintiff had no basis for
the claim and sets up a
counterclaim seeking a
declaration.
“…………….That the action is not
maintainable because they ought
to have first passed through
arbitration as a requirement
under the bond”.
8. Before I proceed to
set out the issues for
determination as agreed between
the parties, it is pertinent to
comment on the defence set up by
the Defendants in this suit
relative to the plea that
Plaintiffs pressurised
Defendants to issue the post
dated cheques as a condition for
renewal of the bond which
Plaintiff failed to do.
9. That to my mind is a
defence of undue influence or
deceit and for same to be
properly pleaded under the rules
of pleading Defendants ought to
have particularise same. The
Defendants failed to provide
such particulars. It is no
wonder that not a scintilla of
evidence was adduced at the
trial to substantiate the
allegation of pressure whatever
meaning is ascribed to the plea.
It is now firmly settled that
pleadings and forensic eloquence
of counsel in oral address or
scholarship in counsel’s written
address will not be a substitute
for evidence adduced at any
trial. Consequently any averment
of fact in a pleading which is
denied without any evidence
adduced in proof of the fact is
deemed abandoned and must be
discountenanced. Not having
adduced any evidence on the
allegation that Plaintiff put
pressure on the 2nd
Defendant to present the post
dated cheques, Defendants are
deemed to have abandoned their
pleading thereof.
10. The second issue
arising from the pleadings is
the nature of the Defendants’
counterclaim which seems to
suggest that the instant action
is not maintainable by reason of
the failure to resort to
arbitration. I would have
thought that where parties have
provided an alternative dispute
resolution mechanism in their
own agreement and a party to the
agreement commences an action in
court without an exhausting the
dispute resolution provision,
the party prejudiced by the
apparent premature step taken
has a duty to apply to the court
to stay the proceedings or even
set aside the writ because the
action had been prematurely
commenced. In all cases of
immunity whether partial or
absolute, and in situations
where pre-action notices or
steps required to be taken
before court action, where
provided in agreements, the
party affected can always waive
the right to challenge the writ
on ground of pre-maturity and
proceed normally. That waiver
need not be expressly made in
writing. It may also be inferred
by conduct which leads to an
estoppel on the party affected
to complain during the
proceedings not having raised an
objection earlier in time and
had proceeded to enter
appearance and file a defence
and had taken active part in the
proceedings. Such a defence in
the nature of the one put up by
the Defendants as the basis of
their counterclaim is an
afterthought unavailable to them
at this stage and ought be
dismissed inlimine. In that
event, Defendants’ counterclaim
is dismissed.
11. Upon the failure by
the parties to settle at the
pretrial conference the
following issues were set down
for trial by the pretrial judge
as the issues for determination
in this suit.
They are:
(1). Whether or not the
parties had an agreement for
Defendants to re – pay Plaintiff
the sum of U$150,000.00 in
instalments?
(2). Whether or not
Plaintiff pressurised Defendants
to issue cheques as alleged or
at all.
(3). Whether or
not Plaintiff is entitled to its
claim?
(4). Whether or not
Defendants are entitled to their
counterclaim?
(5). Any other
issues arising from the
pleadings?
12. DETERMINATION OF
ISSUES BY COURT
In my view the determination of
the issues set down for trial
will effectively and completely
determine the dispute between
the parties. However a crucial
issue arising from the
Defendants’ pleadings is the
issue of law whether or not a
contract of insurance
simpliciter is the same as a
contract to provide a guarantee
bond so that should any
liability arise out of the
failure of a beneficiary of a
guarantee bond to discharge on
its obligations the liability
thereby created by that failure
or default ought to be construed
with the effect of same being a
contract of insurance. This
legal issue is crucial because
its determination one way or the
other will be one on which the
decision in this suit will turn.
13. The law is trite that
to enable a court decide a case
one way or the other, each party
to the suit must adduce evidence
on the facts and issues to be
determined by the court to the
standard prescribed by the
provisions of the Evidence Act
1975 NRCD 323 Section 14 of
which provides.
“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”
14. Having dismissed the
Defendants’ counterclaim on the
grounds earlier set out in this
judgment, I shall determine the
Plaintiff’s burden of proof and
of persuasion in the context of
the pleadings and evidence
adduced in order to arrive at a
determination of the issues set
down for trial. Consequently,
upon the disposal of the
Defendants counterclaim what
remains is for the Plaintiff to
discharge the burden of
producing evidence to the
standard required which is on
the preponderance of
probabilities as provided under
section 12(1) of the Evidence
Act 1975 defined by section
12(2) as
“……………That degree of certainty
and belief in the mind of the
tribunal of fact or the court by
which it is convinced that the
existence of a fact is more
probable than its non –
existence”
15. PLAINTIFF’S
EVIDENCE
In my view the evidence adduced
by the Plaintiff in support of
its claim is simple and not
contradicted controverted nor
discredited and challenged in
any respect. The Plaintiff
through Mark Ofosu Ampofo gave
evidence consistent with the
pleadings that it provided at
Defendants’ request a guarantee
bond to IATA which later
resulted in the Plaintiff having
to redeem the bond upon the
default of the 1st
Defendant to account for tickets
it had sold on behalf of IATA in
the sum of $150,000.00.
16. Plaintiff tendered
Exhibit ‘A’ a letter written by
2nd Defendant in his
capacity as 1st
Defendant’s Managing Director
through which Defendants
confirmed its total indebtedness
to airlines to the tune of
$164,865.00. In further
testimony, Plaintiff tendered
Exhibit ‘B’ a letter written on
behalf of the 1st
Defendant by its lawyer Fred
Asare Danquah where the lawyer
inter alia upon 1st
Defendant’s instructions stated
as follows.
“……………our clients do recognise
that the payment of the debt is
their ultimate responsibility
and would not shirk their
responsibility of discharging
its indebtedness to the
airlines”. (sic).
17. The 1st
Defendant further stated in
Exhibit ‘B’
“Our clients propose to
reimburse SIC the balance by 9
months equal monthly instalments
commencing a month from the date
of payment”.
“To guarantee payment of the
debt our client proposes to use
his single storey executive
bungalow with an outhouse
situate at Abrebo/Bohyen in
Kumasi as security………………”
18. In another letter from
1st Defendant’s
lawyer to Plaintiff admitted as
Exhibit ‘B1’ it was
unequivocally stated on 1st
Defendant’s behalf as follows:
(1). “Our clients would
want to request that SIC
releases the cheque covering the
entire amount of $150,000 to
various airlines through IATA”
(2). “Starline would
liquidate the entire debt to SIC
on a Thirty Thousand United
States Dollars / U$30,000.00
equal monthly instalment
payments commencing one calendar
month or 30 days from the date
of receipt of the cheque”
It is of significance to note
that Exhibit ‘B1’ dated 9th
November 2009 is titled “RE:
STARLINE TRAVEL & TOURS LIMITED
FINAL PROPOSAL”
19. On the following day,
10th November 2009 2nd
Defendant acting in his capacity
as Managing Director of 1st
Defendant wrote Exhibit ‘C’ to
Plaintiff’s General Manager and
copied his lawyer in the
following words.
“We refer to our solicitors
letter to you dated 9th
November 2009, and enclose the
underlisted post dated cheques
to cover full payment of
U$150,000.00 (One Hundred and
Fifty Thousand Dollars only) “to
State Insurance Company”
20. The 5 cheques all with
a payment value of U$30,000.00
each payable between 10th
December 2009 and 10th
April 2010 were listed in
Exhibit ‘C’. Wherein therefore
lies the allegation of pressure
Defendants allege were brought
to bear on them by the Plaintiff
before the said post dated
cheques were released to the
Plaintiff?
21. In my view Exhibits
‘B’, B1’ and ‘C’ belie,
Defendants allegation in the
face of overwhelming evidence
that the Defendants voluntarily
issued the cheques described in
Exhibit ‘C’ some of which were
dishonoured upon presentation
and the others countermanded
without justification by the
Defendants.
22. I have examined
Exhibits ‘A’ to ‘E’ tendered by
the Plaintiff and have subjected
the documentary evidence and the
oral testimony by Plaintiff’s
witness to the standard
prescribed by law on proof. I
come to no other conclusion that
on the authorities, the
Plaintiff has proved its case on
the strength of its pleadings
and the judicial opinions
expressed by superior
authorities.
23. In the case of ABABIO
VRS. AKWASI IV [1994 – 1995] GBR
774 at page 777 Aikins JSC
delivering the lead opinion of
the court said.
“The general principle of law is
that it is the duty of a
Plaintiff to prove his case as
he must prove that he alleges.
In other words, it is the party
who raises in his pleadings an
issue essential to the success
of his case who assumes the
burden of proving it. The burden
only shifts to the Defendant to
lead sufficient evidence to tip
the scales in his favour when on
a particular issue, the
Plaintiff leads some evidence to
prove his claim. If the
Defendant succeeds in doing
this, he wins, if not he loses
on that particular issue”.
24. The ‘best evidence
rule’ is a common law principle
applied in the assessment of the
quality and probative value of
documentary evidence provided
they pass the tests of
admissibility, credibility and
relevancy. In our jurisdiction,
the principle has received
statutory recognition and is
provided for in section 163(1)
of the Evidence Act NRCD 323
[1975] as follows:
“An “original” of a writing is
the writing itself or any copy
intended to have the same effect
by the person or persons
executing or issuing it”
25. The evidence adduced
by the Plaintiff in this suit is
substantially documentary and it
is in the context of the common
law doctrine of ‘best evidence
rule’ and the effect of section
163(1) of the Evidence Act that,
I prefer Exhibits ‘A’ to ‘E’
which include letters and
commitments in writing made by
the Defendants to pay to the
Plaintiff the sum of
U$150,000.00 to the oral
testimony of the 2nd
Defendant on the same
transaction.
26. The judicial position
in attaching weight and
probative value to documents
instead of inconsistent oral
testimony has been emphasised in
the case of HAYFRON VRS. EGYIR
[1984 – 86] 1GLR 682 where
Apaloo CJ in delivering the
judgment of the court castigated
the trial High Court judge for
preferring doubtful and
conflicting oral testimony of
witnesses to documentary
evidence on the same
transaction. I will be guided
the sentiments expressed by
Apaloo CJ in the above case and
will apply same mutatis
mutandis. The
documentary evidence of the
Plaintiff is preferable in terms
of credibility to the oral
testimony of the Defendant on
the same transactions.
27. After putting the
evidence of the Plaintiff which
is substantially documentary and
that of the Defendants on the
imaginary scale, I find the
evidence of the Plaintiff is
weightier in terms of its
quality and probative value. In
my view, Plaintiff’s evidence
adduced at the trial is not only
admissible, it is relevant,
credible and conclusive of the
issues set down for
determination and I so hold.
28. After my evaluation of
the entire evidence of both
Plaintiff and Defendants, I have
come to the conclusion that,
Plaintiff successfully
discharged its burden and the
evidence before me not having
been contradicted or
discredited, I shall resolve
issues (i) and (ii) set down for
determination in Plaintiff’s
favour and find that there was
an agreement between the parties
for Defendants to repay the
Plaintiff the sum of
U$150,000.00 in instalments of
U$30,000.00 per month. I find no
evidence of any kind of pressure
alleged to have been brought to
bear on the Defendants by the
Plaintiff before Defendants
issued the post dated cheques
referred to.
29. But for the issue
arising from the pleadings
relative to a determination of
the difference (if any) between
a contract of insurance
simpliciter and a guarantee bond
which formed the underlying
point in Defendants’ counsel’s
address, I would have concluded
this judgment and make
consequential orders based on my
findings.
30. Unless I have
misapprehended Defendants’
pleading, I think Defendants
legal defence from the pleadings
and evidence is that Plaintiff
being an insurance company had
merely discharged its obligation
under the guarantee bond for
which reason Plaintiff had
already exacted premium from the
Defendants.
31. While giving evidence
for himself and for the 1st
Defendant. Nana Prempeh Annin
Bonsu 2nd Defendant
had reiterated this point. His
evidence is that the 1st
Defendant has since 1989
procured insurance bonds from
the Plaintiff for its operations
as a travel agent and for every
year had paid the sum of
U$6,000.00 for renewal of the
guarantee bond.
During examination in chief of 2nd
Defendant the following evidence
was adduced through the 2nd
Defendant.
“Q. I want you to be clear
to the court this guarantee bond
is it for free or you paid some
money?
A. My Lord we were paying
U$6,000.00 as a premium.
Q. All the years you have
worked with SIC have you ever
defaulted?
A. No My Lord
that was the first time.
Q. And did they ever
refund any of your U$6,000.00 to
you?
A. No My
Lord.
Q. Why?
A. Because we took the
insurance per year so when that
year ends we need to take
another bond and pay another
premium”.
32. This evidence by the 2nd
Defendant formed the basis of
Defendants counsel’s closing
address. He started by
addressing the court as follows:
“This
is an interesting case in the
law of insurance”
From the opening statement of
the address itself, I think
Defendants’ counsel missed the
point as there is indeed at law
a clear difference in the nature
and legal effect of a contract
of insurance as distinct from a
guarantee bond.
33. The learned authors of
“Chitty on Contracts” (Common
Law Library Series) 28th
Edition Volume 2 “Specific
Contracts” paragraph 41 – 001
described a contract of
insurance as follows:
“A contract of insurance is one
whereby one party (the insurer)
undertakes for consideration to
pay money or provide a
corresponding benefit to or for
the benefit of the other party
(the assured) upon the happening
of an event which is uncertain
either as to whether it has, or
will occur at all or as to the
time of its occurrence, where
the object of the assured is to
provide against a cost or to
compensate for prejudice caused
by the event, or for his old age
(where the event is the reaching
of a certain age by the assured)
or (where the event is the death
of the assured) for the benefit
of others upon his death. It is
these objectives which
distinguish insurance from
gaining or wagering. When
embodied in a document the
contract is usually called a
policy, but save in the case of
marine insurance an oral
contract of insurance though
rare, is perfectly valid and may
be indeed also be described as a
policy”
34. At paragraph 44 – 014
‘Performance Guarantee’ also
called Performance Bond or
Guarantee Bond is described as
“………exceptionally stringent
contracts of indemnity. They are
contractual undertakings
normally granted by banks to pay
or repay a specified sum in the
event of any default in
performance by the principal
debtor of some other contract
with a third party, the
creditor. Such guarantees are
sometimes called “first demand
guarantees………………”
“The bank or other financial
institution which grants a
performance guarantee will of
course demand a counter
guarantee or indemnity from the
customer at whose request the
guarantee is granted. As the
customer will be liable to
reimburse the bank on their
payment under the guarantee, and
as he will be unable to prevent
the bank from paying (except in
cases of fraud) when demand is
made on the bank, his position
is clearly perilous”.
35. In the case of EDWARD
OWEN ENGINEERING LTD. VRS.
BARCLAYS BANK INTERNATIONAL LTD.
[1978] QB 159 it was held that:
“These performance guarantees
are virtually promissory notes
payable on demand while such a
counter indemnity by a customer
in favour of a guaranteeing bank
takes effect according to its
terms. There is clearly no
concept of counter indemnity or
repayment of liability paid by
the bank or insurance company as
in this case in a contract of
insurance solely undertaken by
insurance companies”
36. The fundamental
difference between an ordinary
insurance contract and a
guarantee bond, a kind surety
bond or performance guarantee is
that in traditional insurance,
the risk is transferred to the
insurance company whereas in a
suretyship or guarantee bond
scenario as in the instant suit,
the risk remains with the
principal. The protection of the
bond is therefore for the
obligee.
37. Further, in
traditional insurance the
insurance company takes into
consideration that a certain
amount of the premium for the
policy will be paid out in
losses. In true suretyship or
guarantee bond situations
however, the premiums paid are
service fees charged for the use
of the surety company’s or
guaranteeing company’s financial
backing and guarantee. It is
only by coincidence that the
instant guaranteeing company
(Plaintiff herein) is primarily
an insurance company as its core
business though the contract
between Plaintiff and 1st
Defendant is not an insurance
contract as the Defendants’
counsel has urged me to hold. In
a guarantee bond situation
therefore, as the present case
presents, the bond obligates the
surety, Plaintiff herein to pay
a certain amount of money if the
principal, 1st
Defendant herein fails to
perform its obligations with a
third party in this case IATA.
38. It is on the strength
of this distinction, that I am
not persuaded by the legal
position urged on me by the
Defendants’ counsel in his
written address and in
consequence I hereby hold that
Plaintiff is entitled to all
claims against the Defendants.
39. In arriving at this
conclusion I have evaluated the
evidence adduced by the
Defendants which did not
contradict Plaintiff’s
documentary evidence. The key to
Defendants’ defence is the legal
contention that the agreement
between Plaintiff and Defendants
is an insurance contract. I have
held that it is not, and the
Defendants consequently fail.
40. I have also evaluated
the Plaintiff evidence
particularly with respect to the
cheques Defendants issued in
favour of the Plaintiff which
were partly dishonoured and
subsequently countermanded by
the Defendants. In so doing, I
am bound and guided by the
decision of the Supreme Court in
the case of GUINNESS GHANA LTD.
VRS. RAFSCO DISTRIBUTING LTD.
[2007 – 2008] SCGLR 151 where
the court held in Holding (i) as
follows:
“The drawer of a cheque or any
other bill of exchange
undertakes that, on due
presentation for payment, the
instrument will be paid.
Accordingly, if the drawer of a
cheque countermands it, a cause
of action arises against him or
her on this undertaking. This is
particularly so when the payee
having given consideration for
the cheque, is a holder for
value. Thus, the effect of a
countermand is that the payee
does not have a cause of action
against the drawer bank. But
there is no basis for derogating
from the cause of action on the
bill of exchange against the
drawer of it”
41. It is for all the
reasons and the findings I have
set out and made respectively in
this judgment that the Plaintiff
succeeds on all the reliefs
endorsed on the writ and I
hereby enter judgment in favour
of the Plaintiff against the
Defendants jointly and severally
as follows:
(a). An order for the
recovery of the sum of
U$150,000.00 being Defendants’
indebtedness to Plaintiff.
(b). There shall be
interest on the sum of
U$150,000.00 at the prevailing
bank interest rate from 11th
November 2009 till date of final
payment.
( c). Alternatively, I
grant an order for judicial sale
of the 2nd Defendants
property known as Plot No. XI
(or XII) Abrepo/Bohyen in the
Ridge Residential Layout, Kumasi.
There shall be costs in favour
of the Plaintiff assessed at
GH¢5,000.00.
(SGD)
JUSTICE I. O. TANKO AMADU
JUSTICE OF THE HIGH COURT
1. BRIGHT OKYERE –
AGYEKUM Esq.
(For Plaintiff)
2. NKRABEAH EFFAH –
DARTEY Esq.
(For Defendants)
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