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Banking - Promissory notes -
Guarantee -
Interest - Capacity to sue -
Whether
Managing Director, was thought
to have guaranteed payment of
the promissory notes upon
maturity. - whether the court
could waive non- compliance with
all rules of practice
HEADNOTES
This matter began as a result of
what was said to be a default on
the part of the 1st Defendant/
Appellant/Appellant, called the
Appellant, to honour its
obligations by way of a
guarantee of certain promissory
notes issued by the 2nd Defendant
herein. The Appellant, through
its then Managing Director, the
3rd Defendant herein,
was thought to have guaranteed
payment of the promissory notes
upon maturity. The holders of
the promissory notes considered
that in the normal course of
business, upon maturity the
Appellant would honour its
obligations under the guarantee
and pay up. The Appellant has
appealed to this court on
several grounds on the merit of
the case
HELD :-
In conclusion we re-state the
position of the law that failure
to comply with prerequisites to
the issuance of a writ under
Order 2 rule 4(2) renders the
writ void and it can neither be
saved by an amendment, nor can
it be waived by the court. The
appeal therefore succeeds on
this ground and is accordingly
allowed. The writ of summons
issued in this case on 4th March
2010 is declared a nullity.
Consequently, we set aside all
proceedings founded on the said
writ of summons including the
judgments of both the High Court
and the Court of Appeal.
STATUTES REFERRED TO IN JUDGMENT
High Court (Civil Procedure)
Rules, 1954, L.N. 140A
Supreme Court Rules, 1996, C.I.
16
High Court Civil Procedure
Rules.
C.I. 47 Order 81”
CASES REFERRED TO IN JUDGMENT
NAOS HOLDINGS PSC v. GHANA
COMMERCIAL BANK (2005-2006)
SCGLR 407,
OPOKU (No 2) v. AXES CO. LTD
(No2) (2012) 2 SCGLR 1214
NANA YAW OWUSU & OTHERS v.
HYDROFOAM ESTATES LIMITED, Civil
Appeal no. J4/62/2013 dated the
26thday of March
2014.”
REPUBLIC v. HIGH COURT; EX PARTE
ALLGATE CO. LTD. (AMALGAMATED
BANK LTD. INTERESTED PARTY)
(2007-2008) SCGLR 1041
HALL & SONS v. BANK OF GHANA &
ANOR. (2011) 1 SCGLR 378 at 384
OBENG v. ASSEMBLIES OF GOD
CHURCH, GHANA (2010) SCGLR 300
FREMPONG v. NYARKO (1998-1999)
SCGLR 734
OPPONG v. ATTORNEY-GENERAL
(2000) SCGLR 275
REPUBLIC v. HIGH COURT, TEMA; EX
PARTE OWNERS OF MV ESSCO SPIRIT
(DARYA SHIPPING SA INTERESTED
PARTY) (2003-2004) 2 SCGLR 689
ROCKSON v. ILIOS SHIPPING CO SA
& WILTEX LTD (2010) SCGLR 341
AKRONG and Another v. BULLEY
(1965) GLR 469.
INGALLv. MORAN (1944) 1 All E.R.
425, CA;
HILTON v. SUTTON STEAM LAUNDRY
(1945) 2 All E.R. 425, CA;
FINNEGAN v. CEMENTATION CO.,
LTD. (1953) 1 All E.R. 1130,
CA.
DALLAS FORT WORTH INTERNATIONAL
AIRPORT v. COX, 261 SW 3d 378
(Court of Appeals of Texas at
Dallas, 2008),
BOOKS REFERRED TO IN JUDGMENT
‘IN LOCUS STANDI-A COMMENTARY ON
THE LAW OF STANDING IN CANADA
(TORONTO: CARSWELL, 1986)’,
Prof. Thomas Cromwell,
DELIVERING THE LEADING JUDGMENT
BENIN, JSC:-
COUNSEL.
MR. TSATSU TSIKATA FOR THE 1ST DEFENDANT/APPELLANT/APPELLANT
MRS VICTORIA BARTH FOR THE
PLAINTIFF/RESPONDENT/RESPONDENT
JUDGMENT
BENIN, JSC:-
This matter began as a result of
what was said to be a default on
the part of the 1st
Defendant/ Appellant/Appellant,
called the Appellant, to honour
its obligations by way of a
guarantee of certain promissory
notes issued by the 2nd
Defendant herein. The Appellant,
through its then Managing
Director, the 3rd
Defendant herein, was thought to
have guaranteed payment of the
promissory notes upon maturity.
The holders of the promissory
notes considered that in the
normal course of business, upon
maturity the Appellant would
honour its obligations under the
guarantee and pay up. But it did
not do so for reasons that will
be disclosed shortly.
Consequently, by an amended writ
of summons, the
Plaintiff/Respondent/Respondent,
called the Respondent, who
claimed to be representing
certain investors in the
promissory notes, issued a writ
of summons at the High Court and
sought these reliefs against the
Appellant:
(i) Recovery of the sum of sixty
million United States dollars
($60,000,000.00) being the
unpaid guarantee per Aval
granted by 1st
Defendant in respect of
Promissory Notes issued by Eland
International Ghana Limited and
discounted to beneficiaries of
the Plaintiff and which said Per
Aval Guarantee the Defendant has
failed and/or refused to honour
upon default by Eland
International Ghana Limited
despite several and repeated
demands made therefor.
(ii) Interest on the said amount
at the agreed rate of eleven
percent (11%) per annum from the
29th day of January
2009 till date of final payment.
(iii) Costs.
But as earlier mentioned, the
Appellant resisted the claim on
five grounds which are:
a. That it did not guarantee the
promissory notes issued by the 2nd
Defendant.
b. That it did not confirm any
alleged guarantee.
c. That it had not held the 3rd
Defendant out as having the sole
authority or the authority of
its Board of Directors to sign
any guarantee or confirm any
guarantee on behalf of the Bank.
d. That the entire transaction
was tainted with fraud.
Particulars of the alleged fraud
were given.
e. The Respondent was negligent
by failing to conduct due
diligence.
The Appellant’s case did not
find favour with the trial court
so the Respondent's claims were
upheld. The Court of Appeal also
endorsed the Respondent's
claims. The Appellant has
appealed to this court on
several grounds on the merit of
the case.
The Appellant also, per learned
counsel, raised in the statement
of case, what appears to be a
technical but profound legal
objection to the entire
proceedings on ground of
non-compliance with the
provisions of Order 2 Rule 4(2)
of the High Court (Civil
Procedure) Rules, 2004 C.I. 47
and urged the court to dismiss
the action. Indeed they were
challenging the capacity of both
the original and the substituted
plaintiff, per paragraph 4.0 of
their statement of case. They
followed it up with an
application to specifically
address this question of
capacity and non-compliance with
the rules. The application was
granted by this court on 6th
April 2017. They filed the
supplementary statement of case
on 11th April 2017.
We intend to deal with this
question, to begin with.
The said Order 2 Rule 4(2)
provides that:
"Before a writ is filed by a
plaintiff who acts by an order
or on behalf of a person
resident outside Ghana, the writ
shall be indorsed with a
statement of that fact and with
the address of the person so
resident."
There was a similar provision
under the repealed High Court
(Civil Procedure) Rules, 1954,
L.N. 140A which became the
subject of construction by this
court in the case of NAOS
HOLDINGS PSC v. GHANA COMMERCIAL
BANK (2005-2006) SCGLR 407,
hereafter called NAOS Holding
case. The provision under L.N.
140A was Order 3 rule 4 which
provided in relevant terms that:
"If an action is brought by
or on behalf of a person
resident outside......the
indorsement shall so state and
state the residence of such
person."
The court, speaking through
Sophia Akuffo, JSC, (as she then
was), said:
"In arriving at its decision,
the Court of Appeal, per Ansah
JA (as he then was) found that
the terms of Order 3 rule 4 were
clear and imperative, and
required that where an action is
commenced by or on behalf of a
person resident outside the
jurisdiction that fact must be
disclosed in the indorsement and
the residential address of such
person also must be disclosed.
The Court also found that there
was no such endorsement on the
writ and concluded that this
failure to satisfy the
requirements of the Rule was
fatal to the Appellant and that
the writ was a
nullity.................We have
thoroughly examined the judgment
of the Court of Appeal and have
no cause to disturb the same.
The real effect of the
Respondent's motion in the High
Court was to challenge the very
existence of the Appellant as a
corporate legal entity and place
in issue the Appellant's
capacity to sue.....In
conclusion the Court of Appeal
committed no error in upholding
the High Court's ruling. The
writ was void for failure to
state the residence of the
plaintiff......"
Counsel for the Appellant relied
on this authority in his
statement of case, and said it's
on all fours with this case.
That case, like the instant,
involved the issuance of
promissory notes which had been
guaranteed by the defendant
bank. The plaintiff sued in its
capacity as the holder in due
course of the promissory notes.
The defendant entered
conditional appearance and
applied to have the writ
dismissed on this relevant
ground that the existence of the
plaintiff as a foreign entity
was not disclosed and so too was
its address not provided in the
endorsement. This court affirmed
the decision of the courts below
that had upheld the application
to dismiss the writ.
The Appellant has raised three
issues in respect of the
endorsement on the writ. The
first is that it does not
disclose the fact that the
plaintiff is suing on behalf of
foreign based person/s.
Secondly, that the foreign
residential address of the
investors or companies the
plaintiff represents has not
been disclosed on the writ.
Thirdly, the persons on whose
behalf the plaintiff issued the
writ were not disclosed or
identified with specificity.
The starting point of any
discussion under this rule is
the original writ that was
issued by the plaintiff. In the
instant case the original writ
was issued on 4th
March 2010 and it bears the
title:
STANDARD BANK OFFSHORE TRUST CO.
LTD.
STANDARD BANK HOUSE
47-49 LA MOTTE STREET, ST.
HELIER, JERSEY
(SUING ON BEHALF OF CERTAIN
INVESTORS)
C/O HESSE& HESSE
NO. F460/4 GBATSUNA STREET
NYANIBA ESTATES
OSU-ACCRA
Vs.
NATIONAL INVESTMENT BANK LIMITED
37 KWAME NKRUMAH AVENUE, ACCRA.
The title did not disclose who
the “certain investors in
promissory notes” were. The
record shows that the
plaintiff's title was altered in
accordance with an order for
amendment granted by the High
Court on 21st June
2010. Even though there is no
such record of the order
allowing the plaintiff to amend
the title of the plaintiff, yet
there was no issue raised so we
would grant that there was such
an order, on the strength of the
presumption of regularity,
appearing on the face of the
amended writ.
Following this amended writ, the
endorsement on the writ seems to
suggest, by the use of a colon
after the expression "on behalf
of certain investors in
promissory notes", that Sphynx
Capital Markets PCC Investors
and also Tricon Trade Management
Limited are the investors on
whose behalf the plaintiff had
sued out the writ. But the
statement of claim, as amended,
gives a different picture.
Paragraph 13 of the statement of
claim reads:
"On the 23rd day of May 2007
Eland International Ghana
Limited, through Iroko
Securities Limited of London,
United Kingdom, discounted the
said Promissory Notes to
investors of Sphynx Capital
Market PCC, a Mauritian
incorporated entity and
others."
This pleading readily shows that
Sphynx is not the investor per
se as the title endorsed on the
writ suggests. It also shows
that besides the investors of
Sphynx, there were other persons
who also bought into the
discounted promissory notes. And
from the statement of claim, the
only other person mentioned is
Tricon, per paragraph 18
thereof. This was confirmed by a
director of Dominion Corporate
Trustees Limited, Mr David King
in paragraph 3 of his affidavit
sworn in support of an
application for his firm to be
substituted for the plaintiff.
The deposition in the said
affidavit reads:
"That on 4th March 2010 the
Plaintiff herein commenced the
instant suit against the 1st
Defendant in its capacity as the
Security Trustee of Promissory
Notes issued by the 2nd
Defendant and acquired by
investors of Sphynx Capital
Markets PCC Investors and Tricon
Trade Management Limited."
But paragraph 18 of the
statement of claim introduces
yet another dimension to this
matter of who or what the
plaintiff represents. It reads:
"18. Plaintiff says that as of
the 23rd day of
February 2010 the 1st
defendant was indebted to the
plaintiff (as, inter alia,
Trustee of the said Promissory
Notes, SBOTCJ is also
representing Tricon, who held
its participation outside of the
Sphynx Capital Markets PCC
structure) as per Aval Guarantee
in the sum of sixty million
United States dollars........."
Here again the capacity of the
plaintiff appears to have been
shifted; it claims to be the
Trustee of the promissory notes.
They are also representing
Tricon, who it is said also
participated in the acquisition
of the promissory notes. The
affidavit of David King quoted
above affirms these facts. If
they are trustees, the law
requires them to sue in that
capacity and this must reflect
in the title to the case. But it
is not so stated, so we would
dismiss any suggestion or
implication that they sued as
trustees of Sphynx and Tricon or
of the Promissory notes,
whichever description best fits.
Even a cursory reading of
paragraph 13 of the statement of
claim would suggest that Sphynx
and others, identified as Tricon
are not the "certain investors
in promissory notes" mentioned
in the writ, at best they
represent the investors. Hence
the issue of who the "certain
investors" are still remains
unanswered.
The same paragraph 13 discloses
the fact that Sphynx is a
foreign registered company in
Mauritius. Hence the rule under
reference requires the fact that
it is a foreign company to be
disclosed on the writ, in
addition to its foreign address
both of which are required to be
provided. The same
considerations apply to Tricon.
Subsequently, Dominion Corporate
Trustees Limited, hereafter
called Dominion, was substituted
for the plaintiff, Standard Bank
Offshore Trust Company Limited.
It is necessary to identify the
capacity in which Dominion
entered the case. In the
affidavit in support of the
application for substitution
which was deposed to by David
King, it was stated in paragraph
4:
“That as of 4th May
2011 the Plaintiff herein ceased
being the Trustee of the said
Promissory Notes by assigning
its Trustee rights and
responsibilities to the
Applicant herein. A copy of the
Trust Deed transferring trust
responsibilities to the
Applicant as Security Trustee to
the notes is exhibited and
marked as Exhibit RK1.”
In the said exhibit RK1,
Standard Bank, the original
plaintiff, is described as
“Outgoing Trustee and Outgoing
Registrar”, whilst Dominion, the
substituted plaintiff is
described as “Incoming
Registrar”. The position of a
Trustee or Registrar is not
synonymous with ownership; they
are expressions which imply that
they are acting for somebody
else. Therefore, whether they
are Trustees or Registrars
neither Standard Bank nor
Dominion can claim to be holders
of the promissory notes as
owners thereof. It was thus
clear that they were acting for
the true holders of the
promissory notes who are said to
be investors of Sphynx and
Tricon. It was in the same
capacity as the original
plaintiff that Dominion entered
this case.
This conclusion is buttressed by
the fact that the statement of
claim was not amended following
the substitution of the
plaintiff by Dominion. Indeed
the key pleadings contained in
the original statement of claim
filed on 4th March
2010, paragraphs 13 and 18
thereof, remained unchanged when
the first amendment was effected
on 4th February 2011
following the addition of Sphynx
and Tricon to the title of the
plaintiff and the addition of
the 2nd defendant to
the suit. And after Dominion was
substituted for the plaintiff,
it had another opportunity to
amend the statement of claim
when the 3rd
defendant was added as a party
and again paragraphs 13 and 18
remained intact. Consequently,
the plaintiff's case, (even
after Dominion had come in as
the plaintiff), remained that
the promissory notes were held
by the investors of Sphynx and
Tricon, inter alia, per
paragraphs 13 and 18 of the
statement of claim, affirmed by
David King. Thus Dominion had
stepped into the shoes of the
original plaintiff suing on
behalf of Sphynx and Tricon,
(going by the endorsement on the
writ) or on behalf of certain
investors of Sphynx and Tricon,
(going by the statement of
claim).
The plaintiff/respondent
confirmed the capacity disclosed
on the endorsement on the writ
in paragraph 27 of their
statement of case filed in this
Court in these words:
“In the instant case it behoved
on 1st Defendant to
raise any query it had regarding
the existence of Sphynx and
Tricon and or their
authorization of SBOTCJ
and subsequently Dominion,
in the trial court where
evidence could have been readily
produced by the Plaintiff in
answer.” (Our emphasis). Be that
as it may, the capacity
disclosed on the endorsement is
what will prevail, having regard
to the apparent discrepancy
between the endorsement and the
statement of claim, for the
reason that Order 2 rule 4(2)
requires the capacity to be
stated on the endorsement on the
writ.
Dominion was in no doubt that it
had only stepped into the shoes
of Standard Bank, suing on
behalf of certain investors of
the Promissory Notes namely
Sphynx and Tricon. And it is
undisputed that both Sphynx and
Tricon are foreign based
companies. And from the
plaintiff’s own pleadings,
Sphynx and Tricon are only
Trustees for the real holders of
the Promissory notes, whose
identity was never disclosed.
These are the core facts upon
which this issue of capacity
will be addressed.
Arguments by Counsel for the
appellant
Counsel’s arguments were quite
simple and straightforward. The
first point was that the
addresses of Sphynx and Tricon
were not endorsed on the writ of
summons. The second point is
that the writ also failed to
disclose the fact that the
plaintiff was suing on behalf of
persons resident outside the
jurisdiction. Therefore on the
strength of the authority of the
NAOS Holding case, the court
should dismiss the writ and with
it all the proceedings emanating
therefrom. The third reason was
that "certain investors in
promissory notes" stated on the
writ does not sufficiently
describe who the claimants are,
counsel concluded. They also
filed a reply wherein they
debunked all the points that the
respondent raised in their
statement of case; reference
will be made to the material
parts as and when it becomes
necessary.
Arguments by Counsel for the
respondent
In response to the issue that
they did not state the address
of Sphynx and Tricon on the
writ, the Respondent counsel in
paragraph 24 of their statement
of case stated that the address
of Sphynx was to be found in
exhibit C which was tendered at
the trial. Yet they conceded
that the address of Tricon was
not disclosed anywhere. But they
stated that "for purposes of
serving court processes SBOTCJ
and its replacement, Dominion
Corporate Trustees Limited were
always available." This point
can quickly be disposed of in
the sense that the rule does not
require the address for service
of the plaintiff; what is
required is rather the address
of the foreigner on whose behalf
the plaintiff has sued. And
there are good reasons why this
requirement is in place. The
reasons will unfold in a short
while.
Counsel then made the following
interesting arguments:
"25. We respectfully submit that
upon reading the Amended Writ
together with the accompanying
Statement of Claim, the alleged
defect in the Writ can be cured.
This is the current position of
the law as was expounded by
Gbadegbe JSC in the case of
OPOKU (No 2) v. AXES CO. LTD
(No2) (2012) 2 SCGLR 1214 in
which his Lordship said as
follows:
'......the writ of summons ought
to be read together with the
statement of claim in order to
determine if there was any cause
of action before the court. This
is so because a statement of
claim may, in appropriate cases
as provided for in rule 15(2) of
Order 11 of .......C. I. 47,
amplify or diminish the scope of
the writ on which it is
founded.'
26. The above dictum was cited
with approval by Anin Yeboah JSC
in the recent unreported case of
NANA YAW OWUSU & OTHERS v.
HYDROFOAM ESTATES LIMITED, Civil
Appeal no. J4/62/2013 dated the
26th day of March
2014.”
This argument would easily be
dismissed on the facts, for
nowhere in the pleadings did the
Respondent state that Tricon is
a foreign-based firm, and
nowhere in the pleadings did
they provide the foreign
resident address of Sphynx and
Tricon, as required by Order 2
rule (4)(2) of C.I. 47.
Counsel continued that:
“27. In the instant case it
behoved the 1st
Defendant to raise any query it
had regarding the existence of
Sphynx and Tricon and or their
authorization of SBOTCJ and
subsequently Dominion, in the
trial court where evidence could
have been readily produced by
the Plaintiff in answer. Having
failed to do so, 1st
Defendant is deemed to have
waived any objection it had.
28. We are fortified in our
stance by the fact that 1st
Defendant filed a Defence to
Plaintiff's claim showing that
it fully appreciated Plaintiff's
capacity to sue and the case
being made against it. Again, 1st
Defendant being fully aware of
the non-resident status of the
Plaintiff applied for the
Plaintiff to deposit security
for costs in the trial court
even before the amendment of the
Writ of Summons in 2011 .......
29. What is striking here is
that the endorsement of
Plaintiff's capacity on the Writ
of Summpons was sufficient to
put 1st Defendant on
notice of the non-resident
status of the Plaintiff right
from the inception of the suit.
Indeed, in the affidavit in
support, 1st
Defendant also recognized the
Plaintiff as a trustee of the
promissory notes issued by 2nd
Defendant when it was deposed on
its behalf as follows:
'3. That on 23rd day
of May 2007 EIGL through Iroko
Securities Limited in the United
Kingdom, discounted the said
Promissory Notes to investors
Sphynx Capital Markets PCC, a
Mauritius Company.
4. That the current holder of
the Promissory Notes (plaintiff)
is a trustee of the Promissory
Notes for certain holders
thereof.'
31.........It is also
instructive to note that
throughout the trial and even on
appeal to the Court of Appeal 1st
Defendant never queried
Plaintiff's capacity. Had the
Plaintiff's legal status and its
corporate capacity been placed
in issue, it would have been
incumbent upon Plaintiff to
produce cogent evidence of the
existence of Sphynx and
Tricon.......such as their
registered office address or
certificates of incorporation to
satisfy the trial court that
they have the requisite capacity
to sue.
33. In the event that this
Honourable Court finds that the
Plaintiff's Statement of Claim
does not sufficiently cure the
endorsement of Plaintiff's Writ
then it is our respectful
contention that failure to
strictly comply with a
procedural rule such as Order 2
rule 4(2) of.......C.I. 47
should not lead to an automatic
dismissal of this suit due to
the saving grace of Order 81(1)
of C.I. 47. Order 81 provides
that the failure to comply with
the requirements of the Rules,
whether in respect of time,
place, manner, form or content
shall not nullify proceedings."
The learned Counsel for the
Respondent cited this Court's
decision in the case of REPUBLIC
v. HIGH COURT; EX PARTE ALLGATE
CO. LTD. (AMALGAMATED BANK LTD.
INTERESTED PARTY) (2007-2008)
SCGLR 1041 and said their
understanding of that decision
was that "all breaches of the
Rules of Court are curable and
may be waived by the court in
the exercise of its discretion
except three main irregularities
that cannot be waived. These
are:
i. A breach or a violation that
borders on want of jurisdiction
of the court.
ii. A breach of a statutory
provision or an enactment other
than a breach of the rules of
court; and
iii. A breach of any of the
constitutional provisions."
Counsel then submitted that "the
alleged non-compliance with
Order 2 rule 4(2) does not fall
within any of the three
categories or exceptions that
are beyond the curative powers
of the court and should
therefore not nullify the
proceedings."
Counsel also cited this Court's
decision in the case of HALL &
SONS v. BANK OF GHANA & ANOR.
(2011) 1 SCGLR 378 at 384 where
the Court, per Sophia Adinyira,
JSC said: "Although I agree that
a Court cannot conduct its
business without a code of
procedure, I think that the
relation of rules of practice to
the work of justice is intended
to be that of a handmaiden
rather than a mistress, and the
court ought not to be so far
bound and tied by rules, which
are after all only intended as
general rules of procedure, as
to be compelled to do what would
cause injustice in the
particular case."
Counsel submitted that in the
worst case scenario, the Court
could "grant the Plaintiff leave
to amend the endorsement of its
Writ by including the addresses
of Sphynx and Tricon." They
cited this Court's decision in
the case of OBENG v. ASSEMBLIES
OF GOD CHURCH, GHANA (2010)
SCGLR 300 at 324 where the Court
allowed an amendment as to the
plaintiff's capacity.
Consequently, they submitted
that "the present case is a
proper case in which to grant
the Plaintiff leave to insert
the address of Sphynx and Tricon
if required, in order to do
substantial Justice in this
case."
We shall examine the implication
of the ex PARTE ALLGATE case,
supra, which counsel said
decided that the court could
waive non- compliance with all
rules of practice. To the extent
that the court has discretion in
waiving non-compliance with a
rule of practice in appropriate
cases, the submission is
correct. But Order 81 rule 2(a)
entitles the court to set aside
either wholly or in part the
proceedings in which the failure
to comply with a rule occurred,
including any judgment or order
made therein. What this means is
that even after judgment, the
entire proceedings may be set
aside for non-compliance with a
rule of practice. It depends on
the particular breach complained
of. In view of this provision,
the ex PARTE ALLGATE decision
cannot be construed as creating
an inflexible rule that the
court has discretion to waive
non-compliance with any rule.
That cannot be correct. This is
what was actually said in that
decision at page 1049, per
Date-Bah, JSC:
“This argument of the interested
party raises the issue of how to
distinguish between a
non-compliance which can be
saved by the invocation of Order
81 and a non-compliance which
cannot. Clearly, the language of
Order 81, r.1 is intended to
prevent non-compliance with the
rules of procedure resulting
automatically in the invalidity
of the proceedings. The rule
gives the court discretion to
waive the non-compliance or to
set aside the proceedings which
follow from the non-compliance.
In spite of the absolute nature
of the statement in Order 81 r.
1 that the non-compliance shall
not nullify the non-compliant
proceedings, is there still,
even after the commencement of
the new rules, some
non-compliance that would result
in the nullity of the
proceedings?”
The Court acknowledged the fact
that in some situations the
entire proceedings in a case
could be set aside for
non-compliance with a rule of
practice. What the Court
discountenanced was the view
that non-compliance
automatically resulted in an
invalidation of the proceedings
in which the breach had
occurred. The Court proceeded to
cite some instances of violation
of the rules which result in
invalidation thereof. And these
included want of jurisdiction as
decided in FREMPONG v. NYARKO
(1998-1999) SCGLR 734. The other
is a proceeding which is a
nullity or void. In this
connection, at page 1050 of the
report, the Court cited and
approved of the decision in the
case of OPPONG v.
ATTORNEY-GENERAL (2000) SCGLR
275. Even though that case was
decided under rule 79 of the
Supreme Court Rules, 1996, C.I.
16, the Court said it was
“broadly similar in purpose to
Order 81” of C.I. 47. It quoted
this relevant passage from that
decision, per Atuguba JSC:
“The scope of this rule was
extensively considered by this
court in Republic v High Court,
Kumasi; Ex parte
Atumfuwa…..(2000) SCGLR
72…There, I said at length that,
where the step by a party to
proceedings before this court is
fundamentally wrong, such error
is not within the purview of the
rule and cannot be waived.”
These decisions confirm what has
been earlier stated that this
provision gives the court
discretion to set aside
proceedings for breach of a rule
of practice even after judgment.
But where the proceeding is a
nullity in terms of a particular
rule of practice, it cannot be
waived by the court. We can for
instance envisage a situation
where the writ is not endorsed
with any cause of action and
none is disclosed in the
statement of claim. Such
non-compliance cannot be waived
by the court. Hence this court’s
decision in the case of REPUBLIC
v. HIGH COURT, TEMA; EX PARTE
OWNERS OF MV ESSCO SPIRIT (DARYA
SHIPPING SA INTERESTED PARTY)
(2003-2004) 2 SCGLR 689,
dismissing a writ which was not
endorsed with a cause of action
in accordance with mandatory
provisions of the prevailing
High Court rules on ground that
it was a nullity. This decision
was cited with approval in the
case of ROCKSON v. ILIOS
SHIPPING CO SA & WILTEX LTD
(2010) SCGLR 341, where the
action was dismissed because the
endorsement did not disclose a
cause of action. Both cases were
cited by the appellant in
support of this issue. The
principle espoused in those
cases is applicable to this case
in the sense that in those cases
there was infraction of the
rules of court as regards the
endorsement of the writ which
resulted in the writ being
declared a nullity by the
Supreme Court.
Let us take another instance
where on appeal it comes to
light that a person who sued as
an attorney for the plaintiff
did not in fact hold a power of
attorney as at the date he
issued the writ. He secured the
power of attorney in the course
of the trial. The issue of the
attorney’s capacity to sue could
be raised on appeal and the writ
will be declared a nullity
because it is fundamental to the
authority to sue and this
clothes the plaintiff with
capacity to mount the action and
this must be present before the
writ is issued.
A typical example occurred in
the case of AKRONG and Another
v. BULLEY (1965) GLR 469. In
that case the plaintiff sued in
her capacity as the successor
and next-of-kin and later
amended it to include a new
capacity as personal
representative of her deceased
son whose death was caused by
the negligence of a motorist.
Whilst the action was pending in
court the plaintiff secured
letters of administration. The
High Court gave her judgment. On
appeal to the Supreme Court the
question of the plaintiff’s
capacity to sue was raised and
the court upheld it. The court’s
reasoning was based on the
decisions in these cases:
INGALLv. MORAN (1944) 1 All E.R.
425, CA; HILTON v. SUTTON STEAM
LAUNDRY (1945) 2 All E.R. 425,
CA; FINNEGAN v. CEMENTATION CO.,
LTD. (1953) 1 All E.R. 1130, CA.
The ratio in these cases was
that an administrator as such
has no cause of action vested in
him before he has obtained
letters of administration and
that a writ issued by him in
that capacity before obtaining
grant is a nullity. In his
concurring opinion at page 477,
Mills-Odoi, JSC said this:
“…….the plaintiff’s action was
bad as being brought by a person
who had no title to sue. Her
action could not be cured by
amendment into a valid action,
because it was an action which
was never issued at all. For
this reason, the subsequent
proceedings in the supposed
action, including the judgment
of the learned trial judge were
likewise nugatory…….” (emphasis
supplied)
A person’s capacity to sue,
whether under a statute or rule
of practice, must be found to be
present and valid before the
issuance of the writ of summons,
else the writ will be declared a
nullity. In the case of a
company, it’s authority to bring
a lawsuit is one of capacity and
not standing. Capacity to sue is
a very critical component of any
civil litigation without which
the plaintiff cannot maintain
any claim.
The issue of capacity to sue has
been the subject of several
writings, commentaries and court
decisions, such that every
practitioner of the law should
consider it before preparing a
case for court. In an article
titled ‘IN LOCUS STANDI-A
COMMENTARY ON THE LAW OF
STANDING IN CANADA (TORONTO:
CARSWELL, 1986)’, Prof. Thomas
Cromwell, who later became a
judge of the Supreme Court of
Canada, wrote at page 3 that:
“Capacity has been defined as
the power to acquire and
exercise legal rights. In the
context of the capacity of
parties to sue and be sued, to
say that a party lacks such
capacity is to acknowledge the
existence of some procedural
bar to that party’s
participation in the
proceedings-one that is
personal to a party…..and
imposed by law for one or more
of various reasons of policy
usually quite divorced from the
substantive merits……It
concerns the right to initiate
or defend legal
proceedings generally.”
(Emphasis supplied) This passage
was quoted with approval in the
Canadian case of PROVINCE OF NEW
BRUNSWICK v. MORGENTALER, 2009,
NBCA 26 at 43.
That the legal authority to act
is that which gives a party
capacity was also affirmed in
the case of DALLAS FORT WORTH
INTERNATIONAL AIRPORT v. COX,
261 SW 3d 378 (Court of Appeals
of Texas at Dallas, 2008), per
Justice Ritchter who said “…..a
party has capacity when it has
legal authority to act,
regardless of whether it has a
justiciable interest in the
controversy.”
It must be emphasized that the
capacity to sue must be present
before the writ is issued; such
authority must appear in the
endorsement and/or statement of
claim accompanying the writ; it
cannot be acquired whilst the
case is pending; and an
amendment cannot be sought to
introduce it for the first time.
A writ that does not meet the
requirement of capacity is null
and void. Nullity may be raised
at any time in the course of the
proceedings, even on a second or
third appeal. The charge of
tardiness that was raised by the
respondent against the appellant
is thus a red herring and does
not hold water.
It is to be stressed that the
provisions of Order 2 rule 4(2)
of C.I. 47 are obligatory, and
it is not one of those
provisions which the court is
permitted by Order 81 to waive
for non-compliance. As decided
in the NAOS Holding case, supra,
non-compliance with this
provision renders the writ void.
That which is void or a nullity
cannot be waived by the court
under Order 81 of C. I. 47. That
rule is there to ensure that
foreigners, human as well as
corporate, are in existence in
fact and have an address at
which they may be reached by the
defendant and by the court, if
need be. This ensures that the
identity of the real plaintiff
is known by the defendant and
the court lest an impostor
should secure judgment only for
the real claimant to surface
later and saddle the defendant
with another suit. It also
ensures that a judgment or order
obtained against a foreigner
could be executed against him in
his country of residence,
through the address supplied on
the writ, if need be. Lack of
authority to sue amounts to
contempt of court by virtue of
Order 1 r. 4 of C.I. 47,
therefore this provision affords
the only avenue whereby the
defendant may cross check with
the real claimant whether or not
he has authorized the plaintiff
to sue, and if not to bring a
charge of contempt against the
plaintiff. These are clear legal
as well as policy considerations
that justify the construction
placed on this rule by this
court in the NAOS Holding case.
Counsel for the appellant
submitted that as a last resort,
the respondent could be allowed
to amend the writ to supply the
address of Sphynx and Tricon,
especially having regard to the
fact that the address of Sphynx
is found in exhibit C.
Unfortunately that submission
cannot apply here. The rule is
that these requirements of
disclosing the foreign identity
of Sphynx and Tricon as well as
their residential address must
be in place prior to the
issuance of the writ of summons.
The writ cannot be amended after
it has been issued to comply
with the requirements as that
will be contrary to the express
terms of the rule. In the NAOS
case the argument that the
plaintiff's address had been
disclosed in the power of
attorney did not find favour
with the Court. The authority of
NAOS Holding is clear that if
the writ is issued without
satisfying the requirements
imposed by the rule, it is void.
The court cannot grant an
amendment to cure that which is
void. If the writ is void it
gives the defendant a right to
have it set aside wholly in
accordance with Order 81 rule
2(a). It may be likened to
allowing a plaintiff to amend
his case which has the effect of
defeating a defence which has,
since the issuance of the writ,
inured to the benefit of the
defendant, the court will not
allow it. More importantly,
since the writ is void it cannot
be amended.
This situation is clearly
distinguishable from that in
OBENG v. ASSEMBLIES OF GOD,
supra, which was relied on by
the Respondent. In that case,
the plaintiff had sued in its
corporate name which was correct
but had added the words
“Executive Presbytery”. The
court only deleted the
additional words by the
amendment. It is instructive to
note that the amendment was not
what conferred capacity on the
plaintiff. In the AKRONG v.
BULLEY case, supra, the Supreme
Court was minded to allow the
case to stand if they had found
something on the writ and
statement of claim to show that
the plaintiff had also sued in
her capacity as a dependent,
meaning they would not have
dismissed the writ if another
legal capacity had been
disclosed, besides the one which
was found to be illegal. In
other words, the addition of
improper title to a proper one
will be cured by amendment as in
the OBENG v. ASSEMBLIES OF GOD
case, as the writ has already
disclosed a valid capacity in
law. But where the amendment is
to enable the plaintiff to
acquire capacity for the first
time, it cannot be granted.
Before winding down, it must be
noted that in all the cases
cited whereby this court had
declared non-compliance with a
rule of practice to be fatal to
the proceedings, it has been
based on mandatory provisions of
the rules. The rules of court
form an integral part of the
laws of Ghana, see article
11(1)(c) of the 1992
Constitution. Consequently, they
must be treated with equal
amount of respect in order to
produce sanity in court
proceedings. Where a rule is
mandatory by the use of the
expression ‘shall’, it should be
so regarded in view of section
42 of the Interpretation Act,
2009, (Act 792). Where a court
finds it necessary to express
‘shall’ as directional only, it
must be forthcoming with reasons
before deciding to exercise
discretion to waive
non-compliance. There must be
reasons why some of the rules
are mandatory whilst others are
discretionary, a fact which the
court must always bear in mind
in deciding whether to waive
non-compliance or otherwise. In
conclusion we re-state the
position of the law that failure
to comply with prerequisites to
the issuance of a writ under
Order 2 rule 4(2) renders the
writ void and it can neither be
saved by an amendment, nor can
it be waived by the court. Where
the writ of summons issued by a
foreign based firm claims to be
suing on behalf of certain
investors, it is not an
acceptable disclosure of the
identity of the “certain
investors”, thus it becomes an
essential ingredient or
prerequisite for the plaintiff
to disclose who the persons are
on whose behalf it is suing. And
if they happen to be foreigners
this fact must be disclosed as
well as their address and both
must appear on the face of the
writ of summons as endorsement,
else the writ would be void. In
this case since (i) the fact
that Sphynx and Tricon are
foreign based companies and (ii)
their foreign address were not
disclosed on the endorsement of
the writ, the prerequisites for
the issuance of a writ of
summons under Order 2 r 4(2) of
C. I. 47 had not been met and
this non-compliance rendered the
writ void. And it is repeated
for emphasis that being void,
the writ could neither be
perfected by a waiver under
Order 81 nor by an amendment.
And as long as the matter is
still pending before court in
proceedings which are valid
according to law and rules of
practice, the nullity could be
raised at any stage of the
proceedings.
The appeal therefore succeeds on
this ground and is accordingly
allowed. The writ of summons
issued in this case on 4th
March 2010 is declared a
nullity. Consequently, we set
aside all proceedings founded on
the said writ of summons
including the judgments of both
the High Court and the Court of
Appeal.
A. A. BENIN
(JUSTICE OF
THE SUPREME COURT)
S. A.
B. AKUFFO (MS)
(CHIEF JUSTICE)
J.
ANSAH
(JUSTICE OF
THE SUPREME COURT)
S. O.
A. ADINYIRA (MRS)
(JUSTICE OF
THE SUPREME COURT)
ANIN
YEBOAH
(JUSTICE OF
THE SUPREME COURT)
COUNSEL
MR. TSATSU TSIKATA WITH
HIM MR. DICK ANYADI FOR THE 1ST
DEFENDANT/ APPELLANT/APPELLANT.
MR. DEY WITH HIM MRS
VICTORIA BARTH FOR THE
PLAINTIFF/RESPONDENT/
RESPONDENT. |
