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JUDGMENT:
Plaintiff has sued Defendant for
the following reliefs:
“ a. Specific Performance
of an agreement between the
Plaintiff
and the Defendant for the sale
by the Defendant to the
Plaintiff of the property known
as Anchor House located at Osu.
b. Perpetual Injunction
restraining the Defendant, its
assigns,
agents and representatives
from assigning the Defendant
interest in Anchor House to
a Third party or putting any
person
other than the Plaintiff’s
as an Assignee of the said
anchor
House.
c. Further or alternatively
damages for breach of contract
Alternatively,
d.
Repayment to the Plaintiff of
the deposit of $166,666.70 or
its current cedi equivalent paid
hereinunder with interest at the
prevailing bank rate from 9th
December 2008 till date of final
payment.
e.
A
declaration that the Plaintiff
is entitled to a lien on the
said property for its deposit
(together with interest thereon)
and any damages and costs
awarded in this action.
f.
Damages
In any event;
g.
Costs
h.
Any
other remedy as the court may
consider fit to order.
By its pleadings and the
evidence adduced on its behalf,
Plaintiff made a proposal to
Defendant Company to purchase
its property known as Anchor
House located in Osu. Exhibit
“A” is a letter from Plaintiff
with the subject matter being
“Expression of Interest.” In
Exhibit “A”, Plaintiff made a
proposal to purchase the
property in question for
US$730,000.00. After further
discussions, Plaintiff proposed
to purchase the property for
US$750,000.00; Exhibit “B”. By
Exhibit “D”, Defendant accepted
Plaintiff’s offer, and also
stated that Plaintiff was
expected to pay 50% of the
agreed purchase price as a
deposit /advance payment with
the remaining 50% to be paid on
transfer of the property to
Plaintiff.
Plaintiff, in Exhibit “E”, wrote
to Defendant to commit to making
an advance payment of
GH¢200,000.00 on account with a
firm assurance to pay an
additional GH¢250,000.00 not
later than 17th
December, 2008. Defendant wrote
back to Plaintiff (Exhibit “F”)
in which letter they stated that
it had been agreed that the
GH¢200,000 paid by Plaintiff be
converted to US Dollar
equivalent at the date the
amount was paid by Plaintiff on
account. Plaintiff informed
Defendant in Exhibit “G” that
they were unable to make the
outstanding balance on the
proposed date of 17th
December, 2008. This
notwithstanding, Plaintiff
indicated that they were still
committed to purchasing the
property in question.
According to P.W.1 (Francis E
Ocran), Managing Director of
Plaintiff Company, he was
invited to a meeting with the
Managing Director of Defendant
Company on 23rd
December 2008, after the return
of the said Managing Director
from a trip outside the country,
but he could not make it. He
subsequently met with Defendant
on 5th January 2009.
At the meeting, Defendant asked
Plaintiff to submit a new
payment proposal. Defendant
also made it clear that the
transaction had to be concluded
by the end of March 2009. P.W.1
tendered in evidence a letter
(Exhibit “H”) in which Plaintiff
submitted a new payment
proposal. Plaintiff indicated
that they would pay the
outstanding balance on the 50%
deposit by 20th
February 2009.
P.W.1’s further evidence was
that Plaintiff managed to secure
funds around 21st
January 2009 and called
Defendant to inform them of this
fact and also to request that
they furnish Plaintiff with
their account details, but
Defendant did not comply with
this request. Plaintiff wrote
to Defendant on 26th
January 2009 (Exhibit “J”) to
again request for Defendant’s
account details. P.W.1 was
invited to a meeting with the
Director for Finance and
Administration of Defendant
Company. At the meeting P.W.1
was informed about Defendant’s
decision not to go ahead with
the sale of the property.
Plaintiff was allegedly not
given any reason for the change
of mind. Defendant gave a
letter to which a cheque
covering the deposit paid by
Plaintiff was attached but P.W.1
refused to accept them. The
letter and cheque were
subsequently sent to Plaintiff
by courier. The cheque was for
an amount of GH¢200,000.00
(Exhibit K and K1)
Defendant’s case is that
Plaintiff’s offer of
US$750,000.00 for the property
known as Anchor House was
accepted on condition that
Plaintiff paid 50% of the said
amount on or before 31/12/2008.
According to D.W.1 (Ernest
Asamoah), General Manager,
Finance and Administration, it
was Defendant’s expectation that
Plaintiff would pay the 50%
deposit by 31st
December, 2008. Hence Defendant
was not perturbed when they
received a letter from Plaintiff
dated 2nd December,
2008 (Exhibit “E”) in which
Plaintiff stated thus:
“While noting the require(d)
advance payment of the proposed
amount, we hereby make a
commitment with an advance
payment of Two Hundred Thousand
Ghana Cedis (GH¢200,000.00) on
account with firm assurance to
pay an additional Two Hundred
and fifty Thousand Ghana Cedis
(GH¢250,000.00) not later than
17th December 2008.
We hope that this request will
receive your favourable
consideration.”
D.W.1’s evidence was as follows:
Q: You told this court that
they were supposed to pay 50%
they paid GH¢200,000.00 which is
definitely not the 50% as
stipulated in your acceptance
letter. Why did you accept that
amount of money when you knew
very well that it was not the
50% of the US$750,000.00
A: In the said cover letter
accompanying the payment the
Plaintiff had indicated that he
will pay the balance on the 17th
December and since we were
expecting the 50% to have been
paid on or before 31st
December we thought they were
still within time.
Plaintiff was however unable to
pay the total of the 50% deposit
by the 17th of
December 2008 as promised.
Again, according to D.W.1,
Defendant was not perturbed and
did not respond to Exhibit “G”
because the said letter in which
Plaintiff stated its inability
to pay the additional amount
making up the 50% deposit,
“was received far in advance of
31st December 2008
and therefore we were
waiting” Having failed to
meet the condition agreed upon
by the parties, it is the
Defendant’s case that the
parties decided to renegotiate
the transaction for which reason
Plaintiff submitted a new
proposal which was fundamentally
different from the earlier
proposal.
Defendant’s further case
therefore is that it did not
accept the new offer from the
Plaintiff and therefore wrote to
the Plaintiff informing it of
its decision and also attached a
cheque to refund the amount of
GH¢200,000 being the dollar
equivalent of US$166,666.70
which Plaintiff had paid to the
Defendant as commitment fee.
In my opinion, it is important
to determine whether or not
there was a contract between
the parties herein before the
issue of a breach will arise. I
will therefore start by
discussing the basic essentials
to the creation of a contract.
There may be said to be three
basic essentials to the creation
of a contract; agreement,
contractual intention and
consideration. The normal test
for determining whether the
parties have reached an
agreement is to ask whether an
offer has been made by one party
and accepted by the other.
Ampiah J.A, sitting as a High
Court Judge, observed in
Dormenyor v. Johnson Motors
Limited [1968] GLR 168 at
173, that “ In all
contracts there must be an offer
and an acceptance of some sort”.
Also, in Daniele
Construction v. Mabey &
Johnson [2006] 4 MLRG 101 at 116,
V. Akoto Bamfo JA (as she
then was), stated thus;
“ An agreement is reached by a
process of offer and acceptance
and for a determination as to
whether parties have reached an
agreement, one should find
whether there has been a
definite offer by one party and
an acceptance of that offer by
the other, the test being
whether the parties have all
outward appearances as agreed in
the same terms upon the same
subject matter”.
In the instant case there was
undoubtedly an offer made by
Plaintiff to purchase
Defendant’s property, Anchor
House, at the negotiated cost of
US$750,000 as per Exhibit “B”.
This offer was accepted by the
Defendant in the letter tendered
in evidence as Exhibit “D”. The
acceptance was made on condition
that Plaintiff made a payment of
50% of the contract sum by 31st
December 2008.
In English Law, a promise is
not, as a general rule, binding
as a contract unless it is
either made in a deed or
supported by some
“consideration”. The purpose of
the doctrine of consideration is
to put some legal limits on the
enforceability of agreements
even when they are intended to
be legally binding.
Consideration is thus the price
paid by one in order to secure
the obligation by the other
party. Currier v. Misa
[1875] LR 10 Ex provided the
classical definition of
consideration as follows:
“ A valuable consideration, in
the sense of the law, may
consist either of some right,
interest, profit, or benefit
accruing to the one party, or
some forbearance, detriment,
loss or responsibility, given,
suffered or undertaken by the
other”.
In the instant suit, the agreed
price of US$750,000 was the
consideration. Therefore the
elements of offer, acceptance
and consideration have been
established. That there was
intention to create legal
relations is not in doubt.
In a letter written by Plaintiff
to Defendant in which Plaintiff
made the initial offer (Exhibit
“A”), which offer was rejected,
Plaintiff stated thus:
“
21st November 2008
The Chief Executive Officer
GLAHCO
Dear Sir,
EXPRESSION OF INTEREST
Following our discussion
yesterday I hereby formally
submit our proposal of Seven
Hundred and Thirty Thousand
Dollars (730,000.00 USD) for
the purchase of Anchor House
property. We would be happy
to negotiate any associated
details with you as soon as
possible . (emphasis mine)
We look forward to being offered
the opportunity to purchase the
said property, and count on your
kind cooperation.
Yours faithfully,
SGD
Francis Ocran
Director
cc: Francis Fori Dwumah
(Treasury Manager – Unibank)
Vincent Ocran”
In the letter (Exhibit “C”)
written by Plaintiff as a follow
up to its offer, it stated that
“We wish to also assure the
management of GLAHCO that we are
ready with our advance payment
as discussed.” In
Defendant’s letter of acceptance
(exhibit “D”) Plaintiff also
stated that: “It is expected
that 50% of the said amount will
be paid immediately with the
remaining sum paid to us on the
transfer of the property to
you”.
In my opinion, the condition
that Plaintiff pay 50% of the
contract by 31st
December 2008 was not a counter
offer as submitted by Counsel
for Defendant in his written
address; it formed part of the
negotiations that resulted in
the offer and subsequent
acceptance i.e. the agreement
between the parties. There was
therefore a concluded contract
between the parties up until 31st
December 2008 when the contract
was terminated; and I will so
find.
So, how was the contract
terminated? The contract was
terminated because Plaintiff
failed to pay the 50% deposit
which was a condition of the
contract. The position of the
law is that if one party,
without lawful excuse, fails to
perform his fundamental
contractual obligations, the
other party may treat it as
discharged. Thus in the case of
Atta & Another v. Adu
[1987-8] 1 GLR 233, the
Defendant/Respondent badly
needed funds to bail out her son
in England who had financial
problems. She agreed with the
appellant to sell her house with
payments to be made within an
agreed time schedule.
Extensions were granted, which
too, the appellant was unable to
meet. Meanwhile, the cedi was
depreciating in value and
correlatively the cost of
building materials was
escalating. She eventually sold
the house to someone else. The
appellant had sought an order of
specific performance but the
Supreme Court found that in the
circumstances the respondent was
perfectly right to elect to
treat the contract as
discharged.
It must be underscored that it
is not simply any breach that
entitles the other party to be
discharged if he so elects but
it is a breach of the
fundamental contractual
obligation – i.e. a breach of
condition. Or as
Francois JA put it in
Afrifa v Class – Peters
[1975] 1 GLR 359 at 365, he
was not satisfied that the
respondent has been “guilty
of a fundamental aberration
going to the root of her
relationship with that appellant
and destroying it, to entitle
the appellant to hold himself
out as discharged from any
further obligation.”
I will find that Plaintiff
herein breached a fundamental
condition in the contract by
failing to pay the 50% deposit
by 31st December,
2008. Defendant did not breach
the contract, and therefore
Plaintiff is not entitled to the
damages being claimed.
There were however some further
dealings between the parties
even after 31st
December 2008, and Plaintiff is
claiming that the said dealings
were under the same contract and
therefore the failure of
Defendant to allow Plaintiff pay
for the property was a breach of
the contract. The evidence
placed before the Court was that
there was a meeting between the
parties on 5th
January 2009 at which meeting
Plaintiff’s proposals as to how
they were going to pay the 50%
deposit was discussed. As part
of the discussions, Defendant
impressed upon Plaintiff that
the transaction should be
concluded by the end of March
2009. At the end of the meeting
Plaintiff was asked to put its
proposals into writing. These
proposals would form the basis
of a new contract.
As discussed above an offer
which has been accepted and in
furtherance of which the
plaintiff has acted constitutes
a binding contract. Thus in the
instant suit, plaintiff made a
new offer to the Defendant per
Exhibit “H” dated 6th
January 2009. According to
P.W.1, Defendant accepted their
offer. D.W.1 denied this and
therefore the onus was on
Plaintiff to prove this.
An acceptance is a final and
unqualified expression of assent
to the terms of an offer. The
objective test of agreement
applies to an acceptance no less
than to an offer. On this text,
a mere acknowledgement of an
offer would not be an
acceptance. The general rule is
that an acceptance must be
communicated to the offeror. An
offer must be accepted totally –
by express oral or written words
or by conduct to constitute an
agreement. In Fofie v Zonyo
[1992] 2GLR 475 SC the
majority of the Supreme Court
held that an un-communicated
acceptance was ineffective in
constituting an agreement. An
acceptance, even if made, that
was not communicated was a “mere
mental acceptance with no
effect in law” Plaintiff
herein has not proved that there
was either an oral or written
acceptance, or acceptance by
conduct. Exhibit “K” states
emphatically that Plaintiff’s
offer had been rejected.
Plaintiff tendered in evidence,
a letter from Plaintiff to
Defendant on which there were
minutes by some officers of
Defendant company accepting
Plaintiff’s offer. The fact
remains that there is nothing
placed before the Court to prove
that Defendant communicated its
“acceptance” to Plaintiff. On
the contrary, there is evidence
that Defendant rejected
Plaintiff’s offer. I will
therefore find that Defendant
did not accept Plaintiff’s 2nd
offer. In view of this fact,
there was nothing preventing
Defendant from entering into an
agreement with any other party,
including Nosmay Company
Limited.
Plaintiff is also claiming that
the contract sum was denoted in
United States Dollars and
therefore the amount it paid to
Defendant was the cedi
equivalent of US$166,666.70 and
that is the amount that
Defendant ought to have refunded
to it. The fact that the
contract sum was US$750,000 is
not in doubt. In Exhibit “F”,
Defendant confirmed that it had
been agreed between the parties
that the amount of GH¢200,000
paid by Plaintiff to Defendant
would be converted to the
equivalent in US Dollars.
In my opinion the currency of
the transaction was U.S. Dollars
and accordingly the initial
deposit paid by Plaintiff was
the US$ equivalent of
GH¢200,000.00 as at the date of
the payment. In Exhibit “K1”
Defendant clearly accepted that
the amount paid by the Plaintiff
to the Defendant as part payment
if the initial deposit was
agreed between the parties to be
US$ 166,666.70. This is what is
stated in the said letter.
“
January 30, 2009
The Managing Director,
Zicon Consult Limited,
P.O. Box AH34, Achimota, Accra
Dear Sir,
RE: PURCHASE OF ANCHOR HOUSE
We write in connection with your
proposed intention to purchase
Anchor House and in response to
your letter of January 6, 2009
which set out your proposed
payment terms.
Your would recall that in line
with our earlier agreement, you
were required to pay a minimum
50% of the total purchase price
on or before the 31st
of December 2008. You failed to
pay the said amount after you
had made a down payment of
US$166,666.70 (GH¢200,000.00) at
GH¢1.20 to US$1.00.
In your subsequent proposal
under reference, Zicon intends
to pay the outstanding balance
on the 50% down payment on
February 20,2009.
Unfortunately, following your
earlier failure to meet the
agreed datelines, we find
ourselves unable to accede to
your proposal at this time, as
our earlier agreement was
premised on the fact that we
would receive at least 50% of
the purchase price from you on
or before 31st
December 2008.
Consequently, we are unable to
conclude the sale transaction
with you. Please find attached
a cheque in the amount of
GH¢200,000.00 being a refund of
the down payment we received
from you earlier. We trust that
you understand our position.
Yours truly,
(SGD)
ABDULHAMID KARMUS
MANAGING DIRECTOR
Enc.
Cc: File”
P.W.1’s unchallenged evidence
was that the cheque sent to him
in refund of the deposit it paid
to Defendant cleared in their
account on 23rd
February 2009 (Exhibit “L”).
The cedi to the dollar exchange
rate on that date was GH¢1.375
to the dollar (Exhibit “M”). I
would not have found anything
wrong if Defendant had refunded
the cedi equivalent of the
amount of US$166,666.70 as at
the date of the refund. But to
refund the amount of
GH¢200,000.00 which was
equivalent to US$145,250.02 to
Plaintiff I think is most unfair
considering the time value of
money. I will therefore accept
Plaintiff’s claim that there is
a shortfall of US$21,212.20 owed
to it by Defendant and find that
Plaintiff is entitled to a
refund of same.
Plaintiff is also claiming
interest on the amounts of
US$166,666.70 and US$21,212.20.
The basis of awarding interest
on amounts due and owing was
succinctly stated by the eminent
Lord Denning in the case of
Harbutt’s Plasticine v. Wayne
Tank Co. Ltd [1970] 1 All ER 225
as follows:
“...it seems to me that the
basis for an award of interest
is that defendant has kept the
plaintiff out of his money; and;
the defendant has had use of it
himself. So he ought to
compensate the plaintiff
accordingly”
In my opinion therefore
Plaintiff is entitled to the
award of interest from December
2008, when Plaintiff paid the
money to Defendant, to February
2009 when the Defendant refunded
the money to Plaintiff. Also,
by virtue of the Court (Award
of Interest and Post Judgment
Interest)Rules, 2005 (C.I.
52), if the Court decides to
make an order for the payment of
interest on the sum of money due
to a party in an action, the
interest shall be calculated:
a.
At
the bank rate prevailing at the
time the order is made, and
b.
At
simple interest
c.
From
the date of delivery of the
Judgment up to the date of final
payment
I will accordingly award
interest on both sums of
US$166,666.70 and US$21,212.20
at the prevailing bank rate from
December 2008 until date of
final payment.
In conclusion, Plaintiff is
praying for an order of Specific
Performance of the agreement
between it and Defendant. It is
trite learning that contracting
parties must agree on all
material terms. When there is
an absence of certainty on all
material terms, there is no
contract. In Short v. Moris
[1958] WALR 339 there was no
agreement between the parties
relative to such a crucial
matter as the purchase price of
land. There was thus no
contract capable of being
enforced by Mr. Short.
Similarly, in Asare v. Antwi
[1975) 1 GLR 16, the
purchase price of land was not
finalized, nor was specific land
identified. The Court of Appeal
held that there was no contract
and there could be no specific
performance. In Okai v.
Ocansey [1992-3] 3 GBLR 1047,
the Court of Appeal declined to
decree specific performance even
though the respondent was in
possession of the property, had
made some renovations to it, and
had made an advance to the
appellant. The Court refused
the application because
essential terms had been agreed
upon, namely the rent to be
paid, commencement date, and
durations of the lease.
I shall also decline to order
specific performance for similar
reasons; there was no contract
to enforce. I shall also refuse
the claim for perpetual
injunction and the alternative
claim of damages for breach of
contract. I will however grant
the claim for repayment and
refund to the Plaintiff of the
deposit of US$166,666.70 or its
cedi equivalent and further
order the payment of the
outstanding balance of
US$21,212,20 or its cedi
equivalent. I shall refuse all
the other claims.
Costs of GH¢2,000 against
Plaintiff
(SGD)
BARBARA
ACKAH-YENSU (J)
JUSTICE OF
THE HIGH COURT
COUNSEL
ISAAC OSEI
BONSU
PLAINTIFF
KWESI BAFOUR NTSIFUL
DEFENDANT |
